Preamble

The House met at half-past Two o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

Oral Answers to Questions — PRICES AND CONSUMER PROTECTION

Price Commission

Mr. Holland: asked the Secretary of State for Prices and Consumer Protection what proposals she has for setting up an appeals procedure to deal with matters arising from decisions taken by the Price Commission; and if she will make a statement.

The Under-Secretary of State for Prices and Consumer Protection (Mr. Robert Maclennan): There is no scope for this under the Counter-Inflation Act 1973.

Mr. Holland: Does not the Minister agree, on the basis of experience of the working of the 1963 Act, that when a decision of the Price Commission

threatens a whole operation with consequential redundancies there should be a facility for appeal for a modification of that decision before it is finalised?

Mr. Maclennan: There are provisions which allow the Price Commission to consider the relaxation of the provisions of the Price Code in certain exceptional circumstances. The hon. Gentleman and I have had an exchange of correspondence about this matter. I understand that he has a firm in mind which is seeking to make a case under paragraph 76 of the code for exceptional treatment. That case is being considered with all possible speed.

Mr. Giles Shaw: May I remind the Minister that we have raised the question of an appeals procedure before—I think in the debate on the Remuneration Charges and Grants Act? Should there be more cases of difficulty, particularly involving companies in Category 3, which do not normally have the major procedures of inspection applied to them, will the Minister examine them equally carefully?

Mr. Maclennan: That would need to be considered in the context of any new legislation which the Government had in mind.

Price Restraint

Mr. Mike Thomas: asked the Secretary of State for Prices and Consumer


Protection whether she will make a statement on the progress of her negotiations for price restraint.

Mr. Giles Shaw: asked the Secretary of State for Prices and Consumer Protection whether she will make a statement about the progress of her consultations with the CBI and all other interested parties on the subject of voluntary price restraint.

Mr. Scott: asked the Secretary of State for Prices and Consumer Protection whether she will make a statement on the progress of her consultations regarding the introduction of a Selective Price Restraint Scheme.

The Secretary of State for Prices and Consumer Protection (Mrs. Shirley Williams): Discussions are proceeding with the CBI, the Retail Consortium and individual trade associations. I believe that the negotiations will succeed, because industry and commerce recognise how vital success is, in the battle against inflation, and the need to concentrate the initial benefits of declining costs on important items in the family budget.

Mr. Thomas: I thank my right hon. Friend for that reply. What progress is being made on the inclusion of the nationalised industries in the scheme? In particular, what is the relevance of her Written Answer to me in which she said that she will refer the question of fuel tariffs and charges to the National Consumer Council? Has my right hon. Friend any information about the price restraint scheme and the proposed scheme distorting competition and the retail price index? Allegations of that sort are being made. Lastly, what view has the National Consumer Council taken of my right hon. Friend's proposals?

Mrs. Shirley Williams: There is a later Question on the Order Paper dealing specifically with nationalised industries. My hon. Friend may know that last week I made a reference to the National Consumer Council asking it to study the impact of fuel costs on the budgets of low-income groups and families in particular. With regard to my hon. Friend's third question, I assure him that there is no question of distortion of the retail price index. The items in the scheme will be drawn from most fields of con-

sumer spending. The selection of the items depends on the outcome of negotiations with industry. Therefore, within the scheme there will be items both within the RPI and outside it, and the accuracy of the RPI as a yardstick of living costs will be in no way affected.

Mr. Shaw: Industry obviously recognises the importance of problems of inflation. Why is it that at the same time as seeking restraint on prices the right hon. Lady also supports the extension of the dock labour scheme, which will increase distributors' costs and may increase unemployment?

Mrs. Shirley Williams: That is not a question for me.

Mr. Madden: Does my right hon. Friend accept that the major problem of people in Britain today remains making ends meet, and that, whatever the agreement made by the interested parties, there is considerable misunderstanding by consumers generally of what price restraint policies are currently in force and may well be in force in the future? What efforts will my right hon. Friend make to make more widely understood among the general public the price controls that exist, and what will be done to enforce them—something which we all fear is not done today?

Mrs. Shirley Williams: My hon. Friend may care to look at the way in which costs have moved over the past two years. If he does that carefully, by looking at the reports of the Price Commission, I think he will find that he cannot sustain his last remark. I accept that there are problems about publicising the forms of price control that exist. One of the matters that we are taking into account most carefully in our proposals for the price restraint programme is the necessary publicity. The price comparison exercise is directed at the individual consumer in the High Street. That is where the information is being made available.

Mrs. Sally Oppenheim: Will the right hon. Lady now answer the questions she failed to answer in the debate the other night, as to how many items, taken from the list her Department has circulated, she will take as an absolute minimum in any voluntary agreement she may enter into? Will she confirm that for every


price held down under cross-subsidisation another will have to rise by more than it would otherwise have risen?

Mrs. Shirley Williams: I cannot answer the first part of the hon. Lady's question, and I do not think that it would be right to do so, because we are consulting industry, and it would be inappropriate to answer on the basis of a series of dogmatic positions. With regard to the second part of the hon. Lady's question, it is not the case that every item within the price restraint will depend on cross-subsidisation. Certainly some will, but it is not the case that all will.

Mr. Wakeham: asked the Secretary of State for Prices and Consumer Protection how she proposes to bring the cross-subsidisation of products by manufacturers and retailers, proposed as part of the Selective Price Restraint Scheme, within the terms of the Restrictive Trade Practices Act.

Mr. Maclennan: The Selective Price Restraint Scheme is designed to keep down the prices of a range of items of importance in family expenditure, and my right hon. Friend will be ready to use her powers under Section 2 of the Restrictive Trade Practices Act 1968 to approve agreements, made at her request in pursuit of the scheme, which relate exclusively to prices to be charged and whose object is to restrict increases in those prices.
She has, however, no power to approve agreements designed to increase prices.

Mr. Wakeham: As the Government seem to be aware of the danger of the scheme possibly distorting the retail price index, will they take steps to see that proper publicity is given to any distortions which may occur, so that the credibility of the retail price index does not take the battering that it took at the last election?

Mr. Maclennan: No one has sought to discredit the retail price index as an authoritative and accurate account of the movement of prices, and I do not imagine that that is the hon. Gentleman's purpose in putting that supplementary question. My right hon. Friend will issue a consultative document on an amendment to the Price Code, designed to enable firms to increase the prices of their products

where that is necessary to enable them to hold down the prices of items included in the Selective Price Restraint Scheme.

Mr. Mike Thomas: Is my hon. Friend aware that it never ceases to amaze my hon. Friends and me that Opposition Members should seek to find so many loopholes in any proposal to protect the poor from the effect of inflation? Will he take back to his colleagues the message that some hon. Members are most concerned to get this scheme into action, are disappointed that it is taking so long, and look forward to a speedy outcome of the negotiations?

Mr. Maclennan: From the moment of its introduction, Opposition Members sought to snipe at the Government's counter-inflationary policy. I am glad to say that it remains intact and that their attacks have been very wide of the target.

Mr. Norman Lamont: If the retail price index is to be fiddled in this manner, what compensation will the Government give to subscribers to their index-linked savings scheme—or is the answer that it does not make much difference to the long-term rate of inflation?

Mr. Maclennan: The hon. Gentleman should withdraw that remark, suggesting that my right hon. Friend is engaged in some dishonest practice. He must know that that is untrue. I ask him to withdraw the remark, because it is inappropriate and unfitting to a Front Bench spokesman.

Later—

Mr. Thomas: On a point of order, Mr. Speaker. I rise to give the hon. Member for Kingston-upon-Thames (Mr. Lamont) an opportunity to withdraw a remark which I hope and believe he wishes now that he had not made. During Question Time, he alleged that my right hon. Friend the Secretary of State for Prices and Consumer Protection was "rigging" the retail price index. I ask the hon. Gentleman to withdraw that remark, and I ask you, Mr. Speaker, to encourage him to do so.

Mr. Speaker: In fact, the actual word used by the hon. Member for Kingston-upon-Thames (Mr. Lamont) was "fiddling". Although, in the context in


which he used the word, I did not construe it that he intended to imply dishonesty, I must say that I deprecate words of that kind.

Mr. Lamont: I intended in no way to imply that the right hon. Lady had behaved dishonestly or dishonourably. I was referring merely to her attempt, which I thought futile and, in the long run, self-defeating, to hold down prices artificially.

Mr. Adley: Further to that point of order—

Mr. Speaker: No. I think that we have disposed of it now.

Nationalised Industries

Mr. Norman Lamont: asked the Secretary of State for Prices and Consumer Protection if she will make a statement on her plans to restrict price increases in the nationalised industries to 5 per cent. from February to July 1976.

Mr. Tim Renton: asked the Secretary of State for Prices and Consumer Protection how she proposes to restrict price rises in the nationalised industries to 5 per cent. during the six months from 1st February.

The Minister of State, Department of Prices and Consumer Protection (Mr. Alan Williams): The Government are discussing with the nationalised industries the contribution they may be able to make to the selective price restraint scheme described in paragraph 33 of the White Paper "The Attack on Inflation" (Cmnd. 6151).

Mr. Lamont: Has the Minister of State seen the TUC's evidence to the Select Committee on Nationalised Industries suggesting that there would be little advantage to the low-income groups in making a distinction in tariffs between small and large users of fuel? Secondly, does he agree that if price increases in the nationalised industries are limited to 5 per cent. in regard to domestic users, there will be no point or benefit in such a move if it simply means that the costs to industry rise by more than that figure and that that is reflected in the general price of manufactured goods to the domestic user?

Mr. Alan Williams: I have seen the reports, but not the detailed evidence

of the TUC's statement. I fully understand the difficulties. It is one of the factors that we have had to take into account where it involves low-income families living in single-fuel flats who can be high consumers of a specific fuel source. We are taking that matter into account in considering our policies.
On the second part of the hon. Gentleman's question, I draw his attention to the fact that the action involved is intended to be selective and not across the board. Nobody has said that price increases in nationalised industry services are to be held at 5 per cent., as the hon. Gentleman appears to suggest. We are discussing with the industry the possibility of price increases in some services being so held.

Mr. Dalyell: Whereas in general terms the country might be virtuous in urging this kind of restraint, in the case of the railways, where a value judgment may have to be made, does my hon. Friend realise that some of us would prefer to see railway fares rise even further, and well above the 5 per cent., if it would enable the nation to retain railway lines that are vital to the economy, particularly in the north of Scotland and other parts of Britain, and certainly in areas which, because of the growth of new towns, now face different circumstances from those that obtained when the railway lines were closed?

Mr. Alan Williams: My hon. Friend is correct to say that the wider social effects of decisions on the railways have to be taken into account. As a Welsh Member of Parliament, I am conscious of the circumstances that apply in Scotland and some of the other remote areas. That is another factor that would be taken into account in whatever decisions were taken, The main decision will rest with the Ministry of Transport.

Mr. Renton: Does the original reply given to my hon. Friend the Member for Kingston-upon-Thames (Mr. Lamont) mean that the Government are no longer sticking to their intention of keeping price rises in the nationalised industries down to 5 per cent. within the six-months' period, or does it mean that the Government now see the possibility of continuing subsidies in the nationalised industries throughout next year? If the answer is to the latter effect, may I


remind the Minister that in given evidence to the Select Committee on Nationalised Industries the other day the Chief Secretary to the Treasury said that the Government intended totally to phase out subsidies within the nationalised industries during 1976?

Mr. Alan Williams: The objective of viability remains. Nobody has altered it. Indeed, my right hon. Friend the Secretary of State for Prices and Consumer Protection and I have repeatedly made clear that this would be a selective approach. There was never any suggestion by the Government that the whole range should be kept to a 5 per cent. ceiling. It was always made clear that there would be a selective attack on prices, where practicable.

Mr. Mike Thomas: Will my hon. Friend remember that prices and subsidies are not the same thing? Many of us take the view that the existing price structure in the nationalised industries, particularly the fuel industries, is unfair to the small consumer. When tariffs were reversed in Japan there was no question of economic viability being threatened; indeed, more revenue was produced than was required.

Mr. Alan Williams: We shall have those considerations in mind in the decisions we take.

Council of Ministers

Mr. John Evans: asked the Secretary of State for Prices and Consumer Protection when she intends to pay her next official visit to the Council of Ministers.

Mrs. Shirley Williams: I have no firm plans to do so at present.

Mr. Evans: I am disappointed with that reply. Does the Secretary of State accept that the British people expect her to impress on the Agriculture Ministers in the Community the absolute necessity of bringing about a fundamental change in the CAP to ensure that the consumer gets as fair a deal as the farmer? When my right hon. Friend last attended a meeting of Agriculture Ministers, were any other Ministers with consumer responsibilities present? If not, will she impress on other countries in the Community the importance of the attendance of consumer Ministers at EEC meetings?

Mrs. Shirley Williams: On the first point, my hon. Friend will be aware that I was present at a stocktaking meeting on CAP. It would not be appropriate for me, as a non-Agriculture Minister, to be present at price fixing meetings. Those occasions would be restricted to Agriculture Ministers.
On the second part of my hon. Friend's supplementary question, I have a great deal of sympathy with what he said. I believe that the consumer interest needs to be taken more note of in future discussions about the development of the CAP. Although I was the only consumer Minister attending the stocktaking meeting, I would inform my hon. Friend that Her Majesty's Government approached the capitals of all the member countries of the EEC with a view to seeing whether they could send consumer Ministers, or Ministers with consumer responsibilities, to EEC meetings on future occasions. I very much hope that they will do so.

Mr. Marten: What attitude did the Secretary of State take on behalf of the consumer when discussing the stocktaking document in regard to the Commission's proposal for a two-tier price system for fresh milk supplies during the winter? Does she not agree that such a proposal would be very damaging to the consumers in this country?

Mrs. Shirley Williams: The matter did not arise in detail on the stocktaking document. Matters discussed included surpluses in certain commodities, including dairy products; disposal of those surpluses; the basis on which prices should be fixed, for example, on a modern and efficient farm; and the question how far consumer consequences of pricing decisions should be set out in documents on the Commission's initiative in the future.

Goods and Services

Mr. Cartwright: asked the Secretary of State for Prices and Consumer Protection if she will bring forward proposals requiring suppliers of goods and services to quote prices which include the relevant rate of value added tax.

Mr. Maclennan: This practice is being examined by the Director General of Fair Trading, who can put proposals for legislation to control it to my right hon.


Friend through the Consumer Protection Advisory Committee. I would like to have his recommendations and the Committee's report before considering whether any other action should be taken.

Mr. Cartwright: I am grateful to my hon. Friend for that reply, but does he agree that it is difficult for the consumer to exercise an independent choice when some firms quote prices including VAT and others exclude that tax? Does he further agree that in some cases the practice of quoting VAT-exclusive prices is a deliberate attempt to deceive the consumer? Since we are lagging behind our EEC partners in allowing this practice, will the Minister cake the earliest opportunity to ban it?

Mr. Maclennan: I very much agree that it is an undesirable practice and that there is an urgent need for a proposal to be put forward for thorough consideration. It is right that action contrary to good trade practice should be considered by the Office of Fair Trading. We shall seek to operate as speedily as we can the arrangements under Part II of the Act.

Mr. McCrindle: Does the Minister agree that equally confusing is the fact that in respect of service and maintenance agreements in central heating systems the rate of VAT is 8 per cent., whereas in the case of service and maintenance agreements in respect of washing machines it is 25 per cent.? Does he not agree that that anomaly is in need of rectification?

Mr. Maclennan: The hon. Gentleman refers to an issue of substance that would be more appropriately directed to my right hon. Friend the Chancellor of the Exchequer.

Petrol (Retail Margins)

Mr. Les Huckfield: asked the Secretay of State for Prices and Consumer Protection whether she will now make a further statement on petrol retailers' margins.

Mrs. Shirley Williams: The Price Commission's final Report on Motor Fuel Retailers' Margins was published in August. It concluded that gross and net margins had fallen and were unlikely to recover until the market adjusted to a smaller retail network.

Mr. Huckfield: Is my right hon. Friend satisfied with that situation? Is she not

aware that before the last price increase many chains were offering up to 15p discount on retail prices, and that even now, after the recent price increase, we still have discounts of up to lop or 15p being offered? If that kind of discount can be offered, why was a price increase granted?

Mrs. Shirley Williams: The price increase was granted on the basis of United Kingdom costs, not on the basis of world-wide costs. However, I share my hon. Friend's disquiet. Consequently, we shortly expect to make a reference to the Monopolies Commission with regard to the relationship between the oil companies and the retail outlet. My hon. Friend may also like to know that we have mounted a separate inquiry involving the representatives of my Department and those of the Department of Energy into the way in which retail prices are established by the oil companies.

Mrs. Sally Oppenheim: Is the right hon. Lady aware that I have asked the Director General of Fair Trading to proceed with a reference to the Monopolies Commission without further delay?

Mrs. Shirley Williams: I am not sure who is the Minister—the hon. Lady or myself. However, I can assure her that I have done so, lest there be a confusion of identity between us.

Mr. David Steel: In referring this matter to the Monopolies Commission, will the right hon. Lady ask the Commission to consider the recently expanding practice of the oil companies in charging more for smaller quantities of fuel and thus virtually ending retail controls for some rural outlets, where the tanks are not large enough to take the amounts of oil which the companies dictate? This results in an increase in price to people in rural communities.

Mrs. Shirley Williams: I am anxious that there shall not be discrimination of this kind in rural areas. A number of references for special inquiries have been made to the Price Commission on this aspect of small quantities in remote areas. It is certainly a matter which I shall ask the Director General to take into account in connection with the reference.

Mr. Wigley: Is the right hon. Lady aware that although in many cities 15p discounts may have been available, in


rural areas in Wales they are not available, and it is not possible to find them by shopping around? Is she further aware that in such areas motor car transport is a necessity and not a luxury? Will she consider by what mechanics safeguards can be provided in these areas?

Mrs. Shirley Williams: Yes. I would only add that the pattern of discounts has been very disparate in different parts of the United Kingdom. What my hon. Friend has said about rural areas is also true of a number of cities.

Food Subsidies

Mr. David Steel: asked the Secretary of State for Prices and Consumer Protection what has been the total cost of food subsidies since the end of October 1974; which foods are covered by them; and what is the cost per food of these subsidies.

Mr. Alan Williams: The total cost of food subsidies in the 12 months November 1974-October 1975 was about £625 million. With permission, I shall circulate the individual costs of subsidised foods in the Official Report.

Mr. Steel: Does the hon. Gentleman agree that that £625 million could have been more effectively spent in giving help to those who are most in need? What is the Government's precise timetable for phasing out these wasteful subsidies?

Mr. Alan Williams: I am surprised that in the first Question tabled to my Department on this subject from the Liberal Benches for 10 months the hon. Member has not come up with something more original. I was equally surprised at the timing, just before Christmas, of a question pressing us to increase food prices. No doubt the hon. Gentleman's constituents will note that Scrooge is alive and well, and is a member of the Liberal Party.

Mr. Edwin Wainwright: Will my hon. Friend say whether the Department has taken into account what may happen as a result of the shortfall in the Russian wheat harvest—despite the increase in the American wheat harvest—namely, that there may be a greater demand for wheat and that, therefore, the price will go up, which will be detrimental to consumers in this country as well as to those

in other parts of the world? This will mean that subsidies will have to be increased.

Mr. Alan Williams: My hon. Friend is right to draw attention to this difficulty. I gather that his country is fortunate, in that much of our supply has already been purchased.

Mr. Giles Shaw: Will the Minister of State please answer the question asked by the hon. Member for Roxburgh, Selkirk and Peebles (Mr. Steel)? What is the Government's programme for phasing out food subsidies? Is it behind schedule, in advance of, or on schedule?

Mr. Alan Williams: There is a Question on this subject later on the Order Paper.

Following is the information:

The foods subsidised and their individual cost were as follows:


Milk
£336 million


Bread
£85 million


Butter
£104 million


Cheese
£63 million


Flour
£7 million


Tea
£30 million

Price Code

Mr. Neubert: asked the Secretary of State for Prices and Consumer Protection whether she intends to make any changes to the Price Code.

Mr. Canavan: asked the Secretary of State for Prices and Consumer Protection whether she will make a statement about possible amendments to the Price Code.

Mr. Arnold: asked the Secretary of State for Prices and Consumer Protection whether she will take steps further to extend and increase investment relief under the Price Code.

Mrs. Shirley Williams: It is not my intention to make fundamental changes in the Price Code controls before the end of the current phase of the counter-inflation policy, next July. Certain technical amendments will be necessary to ensure that investment relief is available between April and July 1976 and to back up the price restraint scheme.

Mr. Neubert: With the current record levels of unemployment, does the right hon. Lady realise that to those who


understood that profits are central to investment and that investment is central to jobs, that reply is gravely disappointing? Is she going back on the undertaking announced by the Chancellor of the Exchequer, at Chequers, that he would consider relaxing the Price Code to facilitate investment? When will the Cabinet have the collective courage to abandon this policy, which is slowly bankrupting business?

Mrs. Shirley Williams: The position has been consistently explained by the Government over many weeks. I refer the hon. Gentleman to my statement in the House on 16th October, to the November debate, and to this Question. There has been no change whatsoever in this policy. It has been unhelpful that some people have suggested there may have been a change.
With regard to the second part of the supplementary question, there has been a slight improvement in margins over the last three months, as is indicated in the Price Commission's report for the second quarter, and I have no reason to think that that slight improvement has been altered in the last three weeks.

Mr. Canavan: Does the Minister agree that ordinary working people are crying out for stricter price control, as they can barely maintain their living standards? Is she aware that big business is crying out for a relaxation of price controls in order that it may boost its profits, which are not always utilised for investment purposes? In this context, will the right hon. Lady state which side she is on? Will she give an assurance that she will not buckle to CBI pressure to relax the Price Code, especially at a time when workers' wages are strictly controlled?

Mrs. Shirley Williams: I have made it clear that there can be no possibility of a relaxation in price controls, especially during the period of our counter-inflation policy. I have indicated before now that when we are in a position to move on—as I hope we shall be—to an improvement in growth and employment, we shall have to see how the Price Code can be altered to allow such investment to take place. I remind hon. Members that it was the present Government who allowed the recent investment relief.

Mr. Fletcher-Cooke: Has the right hon. Lady noticed a report, which came out today, on the paper and board industry, which shows a frightening situation in terms of investment and employment prospects? When she talks about technical easements which are coming at some time in the new year, will she say whether those technical easements will help the paper and board industry?

Mrs. Shirley Williams: I should require rather longer notice of that question. I have not yet seen the report. The industry, which is a heavy investor, should benefit from the extension of investment relief.

Mr. Norman Lamonts: Has the right hon. Lady abandoned the idea of increasing the three-months pre-notification period?

Mrs. Shirley Williams: No, I have not done so. I have made it clear that if we cannot negotiate a satisfactory price restraint scheme we shall have to consider the question of the three months' gap. I hope that that will not be necessary.

Retail Price Index

Mr. Peter Morrison: asked the Secretary of State for Prices and Consumer Protection what was the 12 month increase in the retail price index at the latest available date.

Mrs. Shirley Williams: The year-onyear figure for the all-items index, which in October was 25·9 per cent., has fallen for the second successive month—the first time that this has happened since May 1972. This deceleration in inflation is expected to become more pronounced as the full effects of the £6 limit work through into the retail price index.

Mr. Morrison: Is the right hon. Lady aware that despite the fact that inflation may not be running at quite the same level as it was three months ago, it is still running at a horrendous level? Does the right hon. Lady agree that so long as public expenditure continues to run at a deficit of something over £10,000 million a year, the retail price index is bound to continue to increase? Will she say what replies to the Chancellor she has made on this matter?

Mrs. Shirley Williams: I do not accept the hon. Gentleman's presumption. First,


we have seen a fall for two months running—nothing like as fast as one would wish, but the six-months' figure is 10·4 per cent., which at an annual rate is 21·9 per cent. The three-months' figure shows an annual rate of 12·4 per cent. Although I have never used a particular figure in this House, which is why I have now given the annual rate, the six-months' rate and the three-months' rate, what is indisputable is that there is a steady deceleration in the rate of inflation, and the main reason for that is the restraint which has been shown by those who are in a position to bargain for higher wages. This is unquestionably having a favourable effect on the RPI. I am surprised that the hon. Gentleman should shake his head at what is, up to now, a policy on target.

Mr. Heffer: As the trade unions have accepted the £6 limit, what action will the Government take in relation to other reasons for inflation, because plainly the question of wages is not the whole content of inflation?

Mrs. Shirley Williams: I do not think that I have ever suggested that it was. It is simply one factor, and as this factor improves there is an effect on the RPI. There are other factors. For instance, the rate of increase in respect of certain commodities has slowed down compared with the position a year ago. This is helpful. Also, there have been signs of a decelerating rate of increase in rates and matters of that kind.

Mr. Lawson: Does the right hon. Lady accept that the imposition of import controls would, of necessity, raise prices? What is her Department's position about import controls, and what representations has she made to her right hon. Friends who are concerned with other aspects of this matter?

Mrs. Shirley Williams: The hon. Gentleman will not expect me to reveal what has taken place at Government discussions, but he knows, as I know, that import controls have a slight effect on prices, though it depends on the length, breadth and items content of any such controls.

Mr. Lipton: Is my right hon. Friend aware that the retail price index contains quite a number of items which old-age pensioners and people on low fixed

incomes either cannot buy or do not want to buy? To that extent, the figures of the retail price index are not as applicable to this section of the population as may be thought.

Mrs. Shirley Williams: My hon. Friend is quite right. He will appreciate, however, that it would be a grave mistake to change the retail price index, which has been accepted by both sides of industry. The pensioner index shows very much the same sort of deceleration as the all-items index.

Mr. Brittan: asked the Secretary of State for Prices and Consumer Protection if she can assess the effect which the voluntary price agreement in the summer had on the retail price index.

Mr. Alan Williams: The voluntary price limitation agreement with manufacturers and the retail trade, which ran initially from June 1974 to March 1975, was designed to hold down the prices of an agreed "shopping basket" of household essentials, mainly foods. It was introduced after the gross margin ceilings permitted under the Price Code for distributors had been cut by 10 per cent. Over this period, the index of items in the agreement increased by about 13 per cent. compared with 19 per cent. for the retail food index. Although the agreement was then extended until June, both parties recognised that the scope provided by the 10 per cent. cut had by then been eroded by the increase of retailing expenses.

Mr. Brittan: Is it right that for the money with which it would have been possible to fill the Secretary of State's famous shopping basket at the time, it would now be possible to fill only two-thirds of the basket?

Mr. Alan Williams: Whether or not that is so, I assume that the hon. Gentleman is keenly supporting any action that will help to restrain inflation. I hope that we shall have his support if we have to bring in any further legislation.

Mr. Marten: Does the Minister recall that in a previous answer the Secretary of State said that wage restraint was the main cause of the deceleration in the price index? Does the hon. Gentleman agree with the other side of the coin—that the acceleration in prices was due to wage increases?

Mr. Alan Williams: My right hon. Friend did not say that. In answer to one of my colleagues she said that it was a factor and, as the level of wage settlements fell, this was being reflected in the rate of inflation.

Low-income Families

Miss Fookes: asked the Secretary of State for Prices and Consumer Protection whether she is satisfied that low-income families will be adequately protected against price increases during the next year.

Mr. Alan Williams: Despite the severe economic constraints that we face, we have given and continue to give priority to the interests of these families in shaping our social and pricing policies.

Miss Fookes: Does the hon. Gentleman accept that that is precious cold comfort for the coming year? Will he reconsider the wisdom of spreading subsidies over the whole population, and concentrate subsidies instead on those in greatest need, where they can do the most good?

Mr. Alan Williams: In case the hon. Lady has not noticed, may I point out that in addition to subsidies there is the price restraint programme. Hon. Members opposite seem to oppose both. We have twice increased pensions this year, and low-income earners will benefit most from the £6 agreement.

Mrs. Millie Miller: Will my hon. Friend bear in mind that in a previous answer my right hon. Friend the Secretary of State referred to those who are able to bargain? The answer to this Question will, I hope, be borne in mind, particularly for those who are not able to bargain for themselves. Does my hon. Friend realise that an increase of 6p in the price of paraffin oil is a devastating blow to old people, many of whom depend on paraffin for their home heating?

Mr. Alan Williams: My hon. Friend is absolutely correct, and it is for that reason that we are giving the priority which we regard as appropriate through subsidies and price restraint. I wish that the Opposition parties would show more support for our policies.

Mrs. Sally Oppenheim: Does the hon. Gentleman realise that the complacency

of the Secretary of State about the rate of inflation and its effect on poorer families is highly alarming, and that even if the Government's target is reached by the end of next year, or exceeded by perhaps 2 per cent. or 3 per cent., inflation is likely to be twice that of our main competitors for the second year running? The effect of inflation on unemployment, poorer families and falling living standards could have been ameliorated if the Government had decided to attack it 17 months earlier than they did.

Mr. Alan Williams: There seems to be a singular lack of positive suggestion of an alternative from hon. Members opposite. I fancy that far from supporting the attack on inflation they are regretting that at last it looks as though it may be succeeding.

Mrs. Bain: Does the hon. Gentleman accept that 20 per cent. of the people in Scotland live on or below the poverty line, as defined by the Department for Social Services, and that average family income is 2·5 per cent. below the United Kingdom average? There is great disillusionment with the Government, who have failed to look after the weak sections of the community, which are least able to defend themselves against inflation.

Mr. Alan Williams: I do not think that the Scottish people will find any solutions in the pipe dreams of the party which the hon. Lady represents.

Groceries

Mr. Dykes: asked the Secretary of State for Prices and Consumer Protection what has been the percentage rise in grocery prices in the 12-months' period to the end of October 1975.

Mr. Maclennan: "Groceries", as such, are not an item defined in the index of retail prices.

Mr. Dykes: In my Question I was referring to grocery prices. Does not the hon. Gentleman follow, for example, the Financial Times index of grocery prices, or what the Grocer magazine publishes? Cannot he say more than he has said? Does he not accept that he and the Secretary of State have an obligation to aim for a lower percentage rise in grocery prices over the next 12 months than is shown in the general retail price index?

Mr. Maclennan: I am not answerable for the unofficial price indices published by newspapers, and the hon. Gentleman would not expect me to comment on them, although I read them with interest. The Government have made plain their hope that a selective price restraint scheme will be of benefit in this area, though we recognise the impossibility of concentrating all the benefits on food.

Mr. Gwilym Roberts: Does my hon. Friend accept that there is considerable evidence to show that many large organisations, such as supermarkets, not only offer loss leaders but charge excessive prices for some commodities? Therefore, is there not a case for adding to the system of ranges of prices by having a maximum price for a wide range of consumer goods? We appreciate the difficulties in this regard, but will my hon. Friend consider this suggestion seriously and discuss the matter with the parties concerned?

Mr. Maclennan: As my hon. Friend knows, we have introduced a maximum price for subsidised foods, to ensure that taxpayers' money voted for the benefit of the consumer reaches the consumer. During the passage of the Prices Bill we considered the possibility of price ranges being introduced. There would be considerable difficulties in implementing such a scheme.

Sherry

Mr. McCrindle: asked the Secretary of State for Prices and Consumer Protection if she is satisfied that there is no undue profiteering by supermarkets on the sale of sherry.

Mr. Alan Williams: The Price Code limits the profit that any supermarket can make on its business as a whole. Traders are free to take a higher margin on an individual product such as sherry, provided their margins on other goods are correspondingly lower.

Mr. McCrindle: But with such wide price variations as 42p on a bottle of Celebration Cream and 30p on a bottle of Emva Cream, is the hon. Gentleman absolutely satisfied that this is simply a matter of those employing the lower prices using sherry as a loss leader, and that there is no element of profiteering? Is he sure that the very broad range to

which I have referred squares with the Price Code?

Mr. Alan Williams: It does square with the code. I read the points which the hon. Member made in his comments to the newspapers, and in virtually every instance the price he quoted was below the manufacturer's recommended price. I am sure that he would not wish to deny the consumer the advantage of lower prices. I conclude from the hon. Gentleman's interest in the matter that he has become an enthusiastic convert to the price information service that we have started, because it is clear that the public stand to benefit from having price comparison information available on a whole range of products.

Invisible Ink

Mr. David Watkins: asked the Secretary of State for Prices and Consumer Protection if she will prohibit the sale of an invisible ink, the name of which has been supplied to her, in view of its dangerous nature.

Mr. Alan Williams: My Department is investigating the degree of hazard and will take such action open to it as it considers necessary.

Mr. Watkins: In view of that helpful answer, may I inform my hon. Friend that, on analysing a sample of this liquid, the public analyst found that it contained 10·3 per cent. sulphuric acid, which is above the level constituting a poisonous substance? Is it not, therefore, particularly dangerous in the hands of children, for whom it is presumably intended?

Hon. Members: Ban it.

Mr. Alan Williams: We cannot ban it, because we do not have the power to do so. The supplementary question raises the relevance of the consultative document which we shall produce later this year. My hon. Friend is correct to draw attention to the fact that this product, like all ink, escapes the Part II provisions in relation to poisons. This exemption was first decided on in the 1930s and as recently as last year the Poisons Board considered that the exemption should remain. However, in the light of the evidence that has come forward we have asked for further investigation, and I am


awaiting the Government Chemist's report.

Mrs. Sally Oppenheim: Will the Minister tell the House whether this could be the same invisible ink with which the social contract was written and signed? If so, and if there is any of it still lurking about in his Department, it could prove to be highly dangerous.

Mr. Alan Williams: I am told that it was used to produce the Conservative election manifesto.

Imports

Mr. Townsend: asked the Secretary of State for Prices and Consumer Protection whether she is satisfied that the movement of import prices during the relevant period will not prejudice the Selective Price Restraint Scheme.

Mrs. Shirley Williams: The White Paper made it clear that agreement on the Selective Price Restraint Scheme would be
subject to unforeseen increases in the costs of materials".
But the expected trends of world demand suggest that this should not be a major problem while the scheme is operating.

Mr. Townsend: Is the Secretary of State aware that 15 months wasted on the "invisible" so-called social contract and the resulting loss of confidence in the British economy have gravely weakened the pound and that, partly as a result, the imported price of raw materials rose by 3¾ per cent. in October? Is it not likely that these price increases will be working their way through the economy just as the right hon. Lady is trying to get her scheme off the ground?

Mrs. Shirley Williams: The hon. Gentleman seems conveniently to have forgotten the extreme speed with which inflation occurred under the administration in which his party led the country two years ago. I shall reply to the Question on the Order Paper by saying that steps have already been taken to make sure that there will be an exemption clause if the price of a particular item unexpectedly rises in such a way as to make it impossible to bring it within the Price Restraint Scheme.

Commodity Prices (Monitoring)

Mr. Hooley: asked the Secretary of State for Prices and Consumer Protection what steps are taken by her Department to monitor international commodity prices so as to ensure that falls as well as increases in raw material prices are reflected in retail prices in the shops.

Mr. Maclennan: Commodity prices are regularly monitored by my Department. The Price Commission keeps its own records, and price indices for different commodities are published in "Trade and Industry". Under the Price Code, falls in raw materials or other costs should be reflected in prices. The Price Commission has taken steps to remind firms of their obligations under the code. My right hon. Friend has asked the Price Commission to study the effect of movements in the price of raw materials on the retail price of goods in the shops.

Mr. Hooley: I am grateful to my hon. Friend for that information, which is extremely important. Is he satisfied that the fall in commodity prices—which has been considerable over the past 18 months—is adequately reflected in the prices in the shops?

Mr. Maclennan: I am satisfied that we have taken all possible steps open to us to ensure that it is reflected, but if my hon. Friend or any other hon. Member wishes to bring to notice goods or services the price of which he considers should be reduced because of any fall in commodity prices, he should refer the matter directly to the Price Commission for examination.

Mr. Wyn Roberts: What steps are the Government taking in anticipation of the increase in commodity prices expected when the recovery in world trade begins?

Mr. Maclennan: The measures I have already indicated, and the fact that my Department is engaged in monitoring world prices, should enable us to respond quickly to any such increase as may occur. The hon. Gentleman may be aware, from its report, that the Bank of England is also engaged in considering the operations of the commodity markets.

Contraceptive Sheaths

Mr. Lipton: asked the Secretary of State for Prices and Consumer Protection whether reduced retail prices of contraceptive sheaths came into effect on 1st December last; and how much these reductions are.

Mr. Alan Williams: LRC International has undertaken to specify and publicise maximum retail prices for its principal brands of contraceptive sheaths and to make it a condition of sale that these prices should not be exceeded. Despite rising costs over the period, the maximum prices of the higher-priced products are being reduced from their 1973 levels by 3p a packet of three, and those of the medium-priced brands by ½p a packet of three. The price of the cheapest brand is being held steady. The new price structure came into force on 1st December but it does not affect sheaths which retailers had in stock before that date. The aim of the undertakings is to reduce the company's profits on home sales of contraceptive sheaths to approximately £525,000 in a full year. The comparable figure for 1972–73 was £2,015,000.

Mr. Lipton: Is my hon. Friend aware that my sources of information reveal that many people do not know anything at all about these price reductions? Is he further aware that in view of the many millions of those things that are sold every month, his admission is very damaging?

Mr. Alan Williams: I am considerably heartened by my hon. Friend's continuing interest in this subject. The price levels apply to deliveries as from 1st December, and therefore they would be appearing in many of the shops over a period of time, but I also understand that certain chemists have already reduced prices.

Oral Answers to Questions — NORTH SEA OIL

Mr. David Steel: asked the Chancellor of the Duchy of Lancaster if he is satisfied with the percentage of revenues from North Sea oil that will accrue to the Government, in the light of his negotiations with the oil companies concerned.

The Chancellor of the Duchy of Lancaster (Mr. Harold Lever): The partici-

pation negotiations are intended not to increase Government revenue but to secure a greater share of the oil and closer links with development. Taxation and royalties are the means for giving the British people their fair share of the profits.

Mr. Steel: I congratulate the Chancellor of the Duchy of Lancaster on appearing before us at 3.30 p.m., but may I say that his zeal on this occasion has been somewhat excessive, in that, for the first time in my experience in the House, I received his answer before I came into the Chamber to ask the Question. Since I have the answer, may I ask him whether he has taken part in the discussions on the White Paper on Devolution? If so, will he use his agile mind to try to devise a scheme whereby some of the taxation or the royalties accrues to the Scottish Assembly, rather than its having too much dependence on the block grant, which is decided in Whitehall?

Mr. Lever: I cannot, as a member of the Government, altogether escape focusing some attention on the devolution proposals. The particular suggestions made by the hon. Gentleman would be better addressed to the future Scottish Parliament, or to other Ministers than myself in the present United Kingdom Parliament.

Mr. Dalyell: What does my right hon. Friend mean by a future Scottish Parliament?

Mr. Lever: I am sorry about that very dangerous slip of the tongue, and I must withdraw it, because it is quite obvious that I have not conveyed the somewhat lighthearted and limited connection I have with the devolution proposals. What I was really suggesting—as I thought, rather humorously; no one must take what I said seriously—was that the hon. Gentleman must address the Question to some other Minister than myself in the present British Parliament and, if he has an interesing area of debate, potentially in such assembly as may come into being in the future.

Mr. Gordon Wilson: While appreciating the Minister's "no gain, no loss" statement concerning the Scottish Parliament, may I ask if he will indicate to the


House how much time he is spending on these complex sets of negotiations, when in fact no fiscal advantage at all seems to be accruing from oil revenues? Does he not think that the real advantage of participation in oil is the buy-back value which is nominally attributed to it by the oil-producing countries and the companies concerned?

Mr. Lever: It was never intended that there should be a fiscal advantage. I regret to say that the clocking-on arrangements in the Duchy of Lancaster office are not adequate for me to give an accurate answer about the exact amount of time I devote to this subject, but I assure the hon. Gentleman that I devote as much time as is necessary, and I think it is well-spent effort.

Mr. Alexander Fletcher: Will the right hon. Gentleman say what are the advantages of these very protracted negotiations? Will they speed up the flow of oil? Will they help to ease the problems of our balance of payments? Will they increase confidence in the oil companies that they can in future search for more oilfields in the North Sea?

Mr. Lever: The purposes of these participation negotiations have been stated and restated in the House, in the White Paper, and elsewhere. The purpose is to add to the Government's know-how in this area and to give them a flexible administrative control over the oil itself.
In so far as the supplementary questions are intended to be answered literally, nothing is done in these negotiations, of course, to jeopardise confidence in the developments in the North Sea. Indeed, contrary to the oratorical furore aroused by them in members of the Conservative Party here, they have aroused no furore among the oil companies, whose development expenditure has—

Mr. Patrick Jenkin: Oh!

Mr. Lever: It is no good the right hon. Gentleman saying "Oh". Development expenditure in the North Sea in the last 12 months has rapidly increased, and there is no indication whatever of any jeopardy to the oil achievement as a result of these participation negotiations. Moreover, in no case do they lessen the

reward. In many cases they actually add to the speed of oil development.

Mr. Canavan: asked the Chancellor of the Duchy of Lancaster whether he will make a further statement on the progress of his negotiations on North Sea oil participation.

Mr. Cryer: asked the Chancellor of the Duchy of Lancaster if he will make a statement on the current negotiations on participation in oil extraction with oil companies.

Mr. Lever: Negotiations are continuing to make progress, and eight companies have now agreed in principle to 51 per cent. State participation in their North Sea commercial oilfields.

Mr. Canavan: Will my right hon. Friend reveal the name of the latest fish in his net? Bearing in mind that he first started fishing in the North Sea over a year ago, does he agree that a total catch of eight out of over 20 companies is not very spectacular fishing, especially bearing in mind that some of the eight are mere tadpoles? When does he expect to complete these vital negotiations and to hand complete responsibility for the oil policy to the Secretary of State for Energy, instead of leaving it to the multinational companies?

Mr. Lever: My hon. Friend's achievements as a fisherman must have been more satisfactory than those of most others, if he imagines that so large and complex a task can be accomplished in a matter of a few months. Enormous progress has been made. These are not tiddlers; they include some of the greatest oil companies in the world, and some with the biggest holdings in the North Sea, like BP itself. The companies concerned are very large-scale operators. What my hon. Friend does not realise is that these negotiations, which I have announced as being successful, in principle, already, are only the tip of the iceberg, and that many important companies are in discussions with us—discussions which have reached a very promising stage. I assure the House and my hon. Friends that if they will show a little patience they will get delivery of the Cabinet mandate in a manner that will be to their satisfaction and, I am sure, to the complete satisfaction of the


oil companies, because that is necessary, as well.

Mr. Patrick Jenkin: We are always too glad to welcome the Chancellor of the Duchy of Lancaster to the Dispatch Box to answer questions on this issue, but may I express the hope that he will spare a few minutes of his precious time to hear the debate that will shortly take place on this issue, so that he may realise just how wrong are some of the points that he has made in his answers so far?
He said a moment ago, in reply to the hon. Member for Edinburgh, North (Mr. Fletcher), that it was never the Governments intention that participation should add to the Government's revenue take from oil. What did his right hon. Friend, Lord Balogh, mean when he said, in the House of Lords, a month ago, that we are in this for the money? Will he explain that remark?

Mr. Lever: Concerning the first part of the question, the right hon. Gentleman must be jesting in seeking to invite me to change my opinion on the basis of arguments in a debate that has not yet occurred. I have no doubt that the right hon. Gentleman has a great deal of confidence in the cogency of his own argument, but he is carrying matters a little far if he wishes me to share it in advance of hearing it. I shall read the right hon. Gentleman's argument when he has made it.
With regard to Lord Balogh's reply to a question, I would have to see to which question the noble Lord was replying. I was answering a question addressed to me and the answer was full and accurate.

Mr. Cryer: Will my right hon. Friend say whether he feels that the negotiations are proceeding with more or less success than the negotiations for British representation at the forthcoming Paris energy conference?
Secondly, will he say what proportion of our future output the eight companies represent, and when he expects the outstanding negotiations to be concluded? Will he assure the House that these highly important negotiations are in no way affected by his other considerable responsibilities, such as supervising the arts and advising the Chancellor of the Exchequer?

Mr. Lever: On my hon. Friend's last point, any judgment on my ability to discharge the range of duties placed upon me must be left to my right hon. Friend the Prime Minister. However, my hon. Friend is free to make his own judgment and to make appropriate recommendations to the Prime Minister. I can only tell him, on the achievement, that I am very satisfied with the way in which the negotiations are proceeding. I have every confidence that the result will be to the entire satisfaction of everyone. I am equally satisfied that to show any impatience with and lack of concern for the anxieties and problems of the different oil companies would be to risk the achievement in the North Sea itself. I am sure that my hon. Friend would not want that.

Mr. Tapsell: Is the right hon. Gentleman in a position to give a firm assurance to the House that it is not his Government's intention, either now or in the future, to sell off any part of North Sea oil to the Government of Iran or the Government of Saudi Arabia?

Mr. Lever: The hon. Gentleman must not expect the same rashness in generalisations of future intentions by this Government as was common with the previous administration.

Mrs. Bain: Will the right hon. Gentleman convey to his hon. Friends the Members for West Stirlingshire (Mr. Canavan) and Keighley (Mr. Cryer) that it comes as no surprise to us to learn that little real progress has been made by the Government in their negotiations with the oil companies, since we are very much aware of the failure of this Government and their predecessors to negotiate greater returns from those companies when they were seeking exploration licences in the first place, and that the licences were handed out like Kojak's lollipops to those companies? Will the right hon. Gentleman give further consideration to the suggestion of the Scottish National Party that instead of responsibility being handed over to the Secretary of State for Energy it should be handed, on an interim basis, to the Secretary of State for Scotland and eventually to the Scottish Assembly? What part has the right hon. Gentleman played in trying to ensure that Scottish interests are represented at the forthcoming energy conference?

Mr. Lever: I do not accept the hon. Lady's premises. Therefore, not surprisingly, I cannot go with her in her conclusions. The Secretary of State for Energy is not altogether unaware of these negotiations. He is very much concerned with them, and we are all working closely in ensuring a satisfactory outcome.

NORTHERN IRELAND (ENDING OF DETENTION)

Mr. Neave: (by Private Notice) asked the Secretary of State for Northern Ireland whether he will make a statement on the ending of detention in Northern Ireland.

The Minister of State, Northern Ireland Office (Mr. Stanley Orme): My right hon. Friend the Secretary of State has made clear to the House the aim of Government policy to release all detainees and in explaining this policy recently emphasised his intention to achieve this by Christmas. He made this clear again last Thursday. The last 46 detainees were released on Friday. Since 1971 over 2,000 persons have been released—about half under the previous administration.

Mr. Neave: I thank the Minister of State for that statement, which could have been made in some detail at Question Time last Thursday but which was not made. Is the right hon. Gentleman aware of the very deep misgivings caused by the fact that the Government have taken this step when violence in Northern Ireland remains at its present level? Is it not possible that they will be forced into the vicious circle of renewing detention? Although we agree that the long-term solution is to bring criminals before the courts, does the right hon. Gentleman recall that on more than one occasion the Secretary of State has said that detention would not be ended until the violence had been checked? Are a number of the men released on Friday self-confessed and advertised members of an illegal organisation, and will they be prosecuted in the courts?

Mr. Orme: On the hon. Gentleman's first question about last Thursday, my right hon. Friend had re-emphasised that it was his intention to end detention. The way in which he did it could be a matter involving security. I hope that the hon.

Gentleman realises that, and that that affected the manner in which it was done. The Government must decide when is the best time to do it.
As for whether the policy will be a success, we believe very much that it will. In recent months, with the phasing out of detention, there has been a detachment from the minority community of the men of violence, and we have had evidence over the weekend that that community welcome very much the ending of detention. We now look forward to positive support from both communities in Northern Ireland in tackling violence.
As for the men in question being members of organisations, the hon. Gentleman knows the problems that exist in regard to that. But I assure him that the law will be prosecuted in whichever way the security forces and not least the police believe that it should be, and that is how the Secretary of State would like to see it carried out.

Mr. Stallard: Does my right hon. Friend accept that this courageous decision, especially in present difficult circumstances, will be welcomed by all, both inside this Chamber and outside it, in the two communities who are still striving for a peaceful political solution and the reconciliation of the two communities in Northern Ireland? But has my right hon. Friend any concrete evidence yet that this step will help to bring about that reconciliation between the two communities?

Mr. Orme: I thank my hon. Friend for his opening remarks. No one pretends, not least the Government, that this was an easy decision to take. But we believe that it was the correct one. We believe that we shall get increasingly the co-operation of both communities. The pursuit of this criminal activity through the courts is beginning to bring real success. More people have been convicted of serious crimes of violence this year than ever before. We hope that this policy will lead to political advancement in Northern Ireland and, not least, isolate those people who turn to violence to try to achieve their ends. As my right hon. Friend has said before, much of the recent violence has had little to do with politics or with the aspirations of either of the two communities in Northern Ireland.
May I deal with the latter part of my hon. Friend's question? We have already


had indications, not least from the minority community, that sections of that community who have been refusing co-operation on a political basis through rent and rate strikes and other means are now publicly ending their actions. We welcome that.

Mr. Molyneaux: Does the Minister agree that the success or failure of release policies will depend greatly on the minority throwing their full weight and influence behind a determined Government drive to eradicate terrorism, for which there can be no possible excuse now? Until the entire Northern Ireland community are thus united, will the Government take resolute and firm action against all forms of continuing terrorism?

Mr. Orme: In answer to that last point, I can give an emphatic "Yes". In the first part of his question the hon. Gentleman referred to the minority community. I believe that this House will be speaking in terms that the minority community will understand and to which they will respond. However, as the hon. Gentleman is aware, sectarian violence has come from both communities. I know the part that he has played in opposing that, and I know that he will continue to do so. Only when we get rid of that type of violence in Northern Ireland can we move forward politically.

Mr. Fitt: Does my right hon. Friend agree that the policy of releasing internees and detainees began under the previous Conservative Administration and that he has only continued a process that was begun by that Conservative Administration? Is he aware that on 9th August 1972, 1973, 1974 and 1975 the Provisional IRA lit bonfires on the streets of Belfast to celebrate the introduction of internment—the greatest weapon in its armoury—and that there were no bonfires on the streets of Belfast when internees and detainees were released last week? Will he further accept that the overwhelming majority of both communities in Northern Ireland now want to co-operate fully with the Government to eradicate the men of violence from their midst?

Mr. Orme: I thank my hon. Friend for that statement. It was the intention of the previous Conservative Administration, as displayed by the previous two Secretaries of State, to phase out and end

detention. That was this Government's policy, which I am pleased to say we have achieved. Those who want this policy to succeed will give it their overwhelming support. I am sure the hon. Gentleman is aware that those who are most disappointed about the ending of detention in Northern Ireland are those who have turned to violence in Northern Ireland.

Sir D. Walker-Smith: Does the right hon. Gentleman appreciate that this statement could have been made last Thursday or, perhaps, on the Friday? Will he assure the House that, wherever considerations of security make it possible, he will give information first to the House in accordance with normal constitutional practice? On the merits of the question, does the right hon. Gentleman agree that although everyone would prefer the due and full processes of the law, efficiency depends on the logistics available? Is he satisfied that the resources of the courts and of apprehension are sufficient for the full substitution of judicial proceedings in such a way as to secure the conviction and punishment of those who commit acts of terrorism and that this will be an effective deterrent to further future acts?

Mr. Orme: The answer to the second part of the right hon. and learned Gentleman's question is, yes—people are now being processed through the courts in a judicial manner. They are tried and, if convicted, sentenced. They are being sentenced for crimes of violence, including murder, to terms of imprisonment which are appropriate to the crimes that they have committed.
The average length of internment has been approximately 18 months. Last year the Commissioners released about 300 people from detention. It is possible that some had committed quite serious crimes, but at that time it was impossible to bring them before the courts. Increasingly, people are now being brought before the courts and evidence is being submitted from both communities which leads to convictions. The courts are operating in a manner with which I am sure the right hon. and learned Gentleman would agree.
I can assure the right hon. and learned Gentleman that my right hon. Friend the Secretary of State


meant no discourtesy to the House when he made his statement last Thursday. He made it clear at Question Time last Thursday that we were seriously examining this matter. On Thursday we shall seek to renew the emergency provisions legislation, when this matter could have been raised. My right hon. Friend made the decision in what he regarded as the most expeditious manner and in the interests of the security forces as much as anything else.

Mr. David Steel: Will not the Minister agree that all hon. Members who wish to see a return to law and order in the Province should welcome this step as one along the long road to the return of law and order by returning to judicial normality in the Province? Some hon. Members find it difficult to understand why there has been dragging of feet on this question.

Mr. Orme: I thank the hon. Gentleman for his statement and his support. Having seen the operation of internment—detention as it was later called—under the present Administration and the problems that it created, I believe that we are better without it and that it is better to use the rule of law and the force of law.

Mr. Dalyell: Does my right hon. Friend appreciate that some of us who have visited Long Kesh and the women's prison in Armagh have been urging this sort of action for two long years, and that we shall stand up and be counted with him and his right hon. Friend the Secretary of State? We wish him well in his policy, which I am sure is right. What evidence is there of detachment from the extremists, to whom he referred earlier in his statement?

Mr. Orme: I thank my hon. Friend for his support and for his statement. Obviously my right hon. Friend would not want to go into detail and it might not be in the interests of those concerned to name names at present. The information being given to the Government at present is of a positive, not a negative, nature.

Mr. Amery: Although we hope that the gamble of the Minister of State and his right hon. Friend will pay off, will the

right hon. Gentleman assure us that he and his right hon. Friend will retain the power and the intention to return to internment should they be proved wrong?

Mr. Orme: We do not look upon this as a gamble. We recognise that difficulties are involved, but we regard this as a positive step forward in trying to bring the two communities together and to reach a political settlement. On Thursday my right hon. Friend will move the readoption of the emergency provisions legislation which will retain the powers, if he so needs them, for detention in the future. The Government hope that they will not need them, but the power will be there.

COVENT GARDEN MARKET (TOLLS)

Mr. Wells: I beg to ask leave to move the Adjournment of the House, under Standing Order No. 9, for the purpose of discussing a specific and important matter that should have urgent consideration, namely,
The threat to London's fruit and vegetable prices, caused by the proposal to introduce tolls on all goods sold in the new Covent Garden market at Nine Elms.
This matter is urgent because the market authority meets the tenants this afternoon with a view to imposing these tolls. It is important because I understand from the market authority's tenants that 55 per cent. of the nation's fruit and vegetables passes through the market. I had understood that it was only 55 per cent. of London's fruit and vegetables. Nevertheless, this is a large percentage of the nation's fruit and vegetables.
If this is allowed to happen, there will be an immediate increase in the price of fresh fruit and vegetables to the nation's housewives. Therefore, I seek leave to move the adjournment of the House under Standing Order No. 9.

Mr. Speaker: As the hon. Member knows, mine is purely a procedural decision. I have to decide whether to disrupt business today or tomorrow for that purpose. The hon. Gentleman has made his point, but it must remain there. I am not prepared to allow the application.

Orders of the Day — SUPPLY

[2ND ALLOTTED DAY]—considered.

Orders of the Day — OFFSHORE OIL

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Stoddart.]

3.48 p.m.

Mr. Patrick Jenkin: Before I come to the subject of the debate, there is one matter that I want to put to the Secretary of State and perhaps he will pass on my representations to his right hon. Friends. It is now a month since the Royal Assent was given to the Petroleum and Submarine Pipelines Act. It is impossible for anyone in the industry or in this House to obtain a copy of that Act. It is outrageous that we cannot even obtain a copy of an Act about which the right hon. Gentleman decided to make a broadcast which, for some reason which we all understood, he withdrew. I hope that he can do something about this, because it is intolerable that the industry and the House should be expected to consider these matters without the legislation before them.
We have chosen to debate the Government's oil policies today for two reasons. First, we want to expose the dangerous fallacy inherent in the Government's euphoric and unrealistic attitude towards the impact which United Kingdom oil will have on our economic prospects. The Government believe, judging by their actions and their words, that United Kingdom oil will be some kind of magic potion which will miraculously transform the whole of our future and enable us to become one of the richest and most powerful nations in the world.
I believe that that was the attitude that underlay the Foreign Secretary's ill-starred swagger and bluster at Luxembourg last month, ending, as we now know, at Rome in humiliation not only for himself and the Prime Minister but for the whole nation. I think that somehow was behind his actions.
The Prime Minister's repeated references to Britain joining OPEC, which is

calculated to cause the maximum offence to our friends in both the consuming and producing countries, and indeed worldwide, is born of the same sad illusion.
The Secretary of State himself seems to be approaching his responsibilities in a way which shows that he totally fails to understand the harsh realities of our situation. To talk, as he has, of summoning a world conference of State oil companies at a time when the BNOC's entire staff consists of Lord Kearton and a secretary displays delusions of grandeur approaching paranoia.
But perhaps the most revealing glimpse of ministerial euphoria came in the Prime Minister's Guildhall speech on 10th November when he spoke of our economic strength being
revolutionised, when the flow of North Sea oil into the refineries which started in Aberdeen last week, becomes a torrent.
Later he said:
So let there be no doubt about the economic strength we shall be asserting by the end of this decade, nor any doubt about what this twentieth century industrial revolution will mean".
To talk like that in the light of the real problems besetting the economy is fatuous.
The Chequers strategy paper spelled out the causes of our economic weakness with admirable frankness. It talked of low investment, poor returns on investment, shortages of skilled labour, poor productivity, poor management, inadequate consultation, restrictive practices, overmanning, industrial disruption, unhelpful attitudes to pay and mobility, unstable economic management, excessive public spending, price controls, and so on.
Neither oil nor oil revenues will by themselves cure any of these things. Yet Ministers somehow go round trying to convey the impression that all we need to do is to tighten our belts for a couple of years and thereafter effortless prosperity is somewhere just around the corner. It is not. It is we ourselves, the whole British nation, not our oil, who must resolve to cure the deep-seated ills from which we suffer. Of course the oil will help. It will help particularly on the balance of payments, but it is not the key to Nirvana.
Our second purpose in debating this subject today is to expose the sadly


deteriorating oil scene in Britain and to pin the blame fairly and squarely where it belongs—on Her Majesty's Government—and, in particular, on their misbegotten and doctrinaire obsession with nationalising 51 per cent. of the offshore licences. The uncertainty which has been created—uncertainty is the great killer of confidence—is strangling the offshore industry. Here, too, Ministers continue to display a bland complacency which is breathtaking when compared with the facts on the ground.
Here I come to the Minister of State. We warmly congratulate him on his promotion, although our congratulations must be tinged with some sympathy that he is succeeding the noble Lord, Lord Balogh, just at the time when the policies perhaps identified with the noble Lord more closely than with anybody else are crumbling round the ears of the Government.
The Minister of State presented a paper in Aberdeen on 21st November to the Standing Conference on North Sea Oil. It purported to be a progress report, but the whole document is redolent with an odious aura of self-congratulation which I find strange. One sentence which at the present juncture deserves to be recorded for posterity is:
The level of activity in all stages of the process of exploration for and development of our offshore petroleum resources is healthy and vigorous.

The Minister of State, Department of Energy (Mr. John Smith): That is correct.

Mr. Jenkin: Tell that to the marines. The hon. Gentleman knows that it is rubbish, and certainly the Northern group of Labour Members who took a deputation to see the Secretary of State a month ago about the threatened unemployment at Graythorpe know it is rubbish. There are no prospects of an order for the Graythorpe yard until 1977. I hope that hon. Gentlemen opposite, when they read rubbish like that, will rise up in anger against the Minister of State for his complacency.
The Government are complacent even against their own forecasts. The Chancellor of the Duchy of Lancaster, answering Questions a few minutes ago, was at pains to point out to his hon. Friends that they could not expect immediate results

from the participation negotiations, that they are immensely complicated, that progress is being made, but that there are many companies and that the issues are complex.
That was not what his predecessor said when he introduced the Bill last April. He said,
by the end of this year you will find that most of the companies have agreed to participation on terms which are fair to Britain and fair to the companies.
There is no agreement yet in sight. Only eight companies have agreed in principle—seven of them under duress and one under orders.
The participation negotiations are becoming a shambles. Yet, until certainty returns, there is little chance of the momentum on oil development returning. Until it does, oil workers and workers in oil-related industries will continue to go on the dole. I hope that is what hon. Gentlemen opposite want, because that is what will happen. The Government's policies are putting at risk even those benefits which it is realistic to expect to flow from United Kingdom oil.
These are matters of extreme gravity. If the Government continue to bungle the development of the United Kingdom's oil resources, while at the same time pinning exaggerated hopes on the benefits which will flow from our oil, they will forfeit, and deserve to forfeit, any shred of confidence which they still manage to retain. With oil we might just about get by. Without it, our prospects would be bleak indeed.
I should now like to turn to a brief analysis of the likely impact of oil on the United Kingdom's economy. I ask the House to bear with me in going through come of the figures.
Looking at the development of United Kingdom oilfields in isolation, the picture is by no means unattractive. Some figures recently published by the Scottish brokers, Wood, Mackenzie, are probably as good a guess as anyone's of the likely outcome. They show that the overall contribution to the balance of payments—that is, the net inflow of capital plus the impact of the oil on our current account—rises from an inflow of under £400 million in 1975 to over £3,500 million in 1980. Figures for the probable Exchequer revenues from oil are also given. These are estimated


to rise from £10 million in 1975 to £1,860 million in 1980.
It is true that these estimates are based on what some people might think is a rather optimistic assumption about the development of the oilfields. For instance, they assume that the Hutton field will be developed, but there is still a big question mark hanging over that. However, the figures are probably of the right order of magnitude.
But, of course, they look at United Kingdom oil in isolation, something we cannot do. We must take account of the overall prospects.
Take first the balance of payments. We cannot look only at the net benefit of United Kingdom oil there. We must look at the whole oil sector balance. The Government have published no estimate of this, so we must rely on independent studies. A recent study was prepared by the group at the European Institute of Business Administration—INSEAD—and I believe it is authoritative. If the Government challenge its figures they must give their reasons. The study shows, taking account of the cost of oil imports together with the accumulating debt they represent, that, even with a substantial net export of United Kingdom oil after 1980 and with a significant premium on our oil, a net credit balance is achieved for only two years between now and 1984. Up to 1980 oil will continue to be drain on our balance of payments. Unless oil production rises to well above 150 million tons a year it will still be a drain from 1983 onwards. There will be small surpluses on the balance of payments in just two years—1981 and 1982.
Of course, the situation would be catastrophically worse if we did not have the oil. That, however, is not the point. The conclusion of the INSEAD study is quite clear. Perhaps I may quote from a review of the study in the Financial Times on 3rd October. It says:
North Sea oil will represent a fortuitous opportunity to cancel out the adverse effect of the quadrupling of the price of oil but … the country will have to go for substantial net exports of oil or other goods in the 1980s if it is to service the oil sector debt accumulated in the meantime. And there's the rub.

Dr. Colin Phipps: Did I understand the right hon. Gentleman to say that by 1983 we should be using 150 million tons of oil a year? That

appeared to me to be the theme of the study, yet best current estimates put the figure at not more than 110 million tons.

Mr. Jenkin: I said that the figure related to production. The study estimates United Kingdom consumption rising by 1984 to no more than 119 million tons, which is probably not an unrealistic figure.
Do the Government challenge the conclusion that we shall need a surplus of the order I have described simply to pay the interest on the debts incurred in the meantime? We deserve an answer to that question because the conclusion very much contradicts what the Prime Minister and others have been saying. If these figures are anything like correct, there will be no balance of payments bonanza. The oil will do little more than avert for a few years the catastrophe which would otherwise have overwhelmed the United Kingdom economy, and for Ministers to try to pretend otherwise is for them to delude themselves and to deceive the nation.
Then there is the question of the oil revenues to the Exchequer. It is said that these will surely be a substantial benefit. However, we cannot look at the oil revenues in isolation. We face a series of dreadful Budget deficits in spite of almost whatever the Chancellor of the Exchequer may do. The April Budget this year had a public sector borrowing requirement estimate of £9 billion. A month ago the Chancellor told the Parliamentary Labour Party that the public sector borrowing requirement
was now running at about 20p in the pound
—and that means that it may be between £11 billion and £12 billion this year. The interest payment at, say, a 12 per cent. rate on that figure are almost £1½ billion a year, on just one year's addition to the National Debt. My hon. Friend the Member for St. Ives (Mr. Nott) was told in a Written Answer on 3rd December at cc. 658–9 that the total public sector interest charge on debt had risen from £1,379 million in 1964–65 to an estimated £5,074 million in 1975–76. That latter estimate was based on the assumption of a £9 billion borrowing requirement. If that rises to nearly £12 billion, the total interest payment in the current year could not be less than about £5·4 billion.
That is bad enough, but we must look to 1980 and here we must make some assumptions. I have assumed, generously, that the Chancellor of the Exchequer will manage to reduce the public sector borrowing requirement by £2 billion every year between now and 1980–81. That means that a £12 billion deficit in 1975–76 will be down to a £2 billion deficit in 1980–81. In those five years some £30 billion will have been added to the National Debt, and the extra interest payments-12 per cent. on 30 billion—will be an additional £3·6 billion charge on the Exchequer. That is just double the anticipated Exchequer revenues from North Sea oil in 1980. Let me repeat that. The extra interest payments on the National Debt by 1980/8 will be just double the estimated oil revenues in that year. I must ask the Government whether they dispute these estimates.
We should be much worse off without the oil revenues, but it would be ludicrous to argue, as the Prime Minister did at the Guildhall, that the oil will be
the foundation of a 20th century industrial revolution.
The only revolution the Prime Minister faces will be in his own party when his hon. Friends realise how they have been fooled by language of that sort. Whatever the benefits of United Kingdom oil may be, they are being spent now in the deficit the Government are running up. If we spend it now we cannot spend it again later. That truth should be shouted from the rooftops.
However, even these benefits depend on our oil development going according to plan, but what is happening? The story is starkly but, I believe, accurately told in a series of newspaper headlines which began back in June and bring us up to date. They read as follows:
British platform yards facing orders crisis".
Then,
Benn brings pressure for oil platform orders".

Hon. Members: Are there any cuttings from the Morning Star?

Mr. Jenkin: No, I have none from the Morning Star. Those I have are from the Financial Times, The Times, the

Daily Telegraph, the Scotsman and The Guardian. They go on:
Campbeltown's hope of oil boom jobs recedes".
Then
No-order blow to Portavadie yard".
Then we come up to October and the headline,
Rig lay-ups sign of depression
followed by,
Rig makers warn of lay-offs
and then,
No more platform orders this year".
Then,
Threat to Britain's oil as yards run out of orders for new platforms
followed by,
Gloom over future of oil jobs".
Then,
Orders for oil platforms disappointing, Benn says
and,
Fresh attempt is likely soon to gain oil platform orders
followed by,
Benn admits oil rig defeat
and, finally,
No work in sight for £14m oilrig yard".
What a distastrous commentary on the Secretary of State's conduct of our affairs. Labour Members know that all this is true because they have been leading deputations to the Secretary of State to express their anxieties.
The workers at the Graythorpe yard are desperately worried because they have been told that there is no prospect of any orders before 1977. I cannot help feeling that the union deputation that waited on the Secretary of State on 30th October must have been disillusioned when he told them that there was nothing specific that he could offer other than pointing out the existence of the £10 per head temporary employment subsidy. My hon. Friend the Member for Ross and Cromarty (Mr. Gray) faces the same problems at Nigg Bay and Kishorn.
There is no comfort from the Members of the Scottish National Party who voted for the Second Reading of the Petroleum Bill and who have made it abundantly clear that they too believe in a State oil company.
I turn to the rundown of exploration rigs. It was expected that by this year there would be 40 rigs at work. Last month there were 27 and this month only 26. All the forecasts indicate that next year there will be still fewer rigs. At present those rigs are engaged solely on drilling to fulfil their commitments, or on appraising existing finds. There is no genuine wildcat drilling being carried out at all.

Mr. John Smith: The right hon. Gentleman has once again said that the Government forecast that 40 rigs would be working this year. As he studies the statistics carefully he will know that the prediction was 30. The outturn is likely to be 28, which is not bad for projects taking place in this difficult area. To say that we said there would be 40 working is just not true.

Mr. Jenkin: The hon. Gentleman will no doubt be able to make his case, but all the assumptions upon which the Government were basing their forecast were that there would be a steady build-up of the number of rigs, and 40 was certainly mentioned.
Why is there a rundown in the platform yards? Why are the rigs leaving United Kingdom waters? I accept that costs have risen. Inflation has hit the oil industry as hard as it has hit anywhere else. Also the risks are great. To talk about risk-free investment is rubbish. We have been reminded only this weekend of the severe technological risks which are involved in developing oilfields in the hostile waters of the North Sea.
However, there is not the slightest doubt that the central reason for the loss of confidence in this industry is the foolish and irrelevant policy of 51 per cent. participation. The Treasury knows that it is a nonsense. The Chancellor of the Duchy of Lancaster knows that it is a nonsense. Otherwise why is the right hon. Gentleman constantly pressed by his hon. Friends from below the Gangway? I suspect that half the Government know that it is a nonsense, yet the right hon. Gentleman told us a few weeks ago that he was "implacably resolved" to secure 51 per cent. participation. Primarily it is participation, leading to loss of confidence which is causing such havoc to the pace of development.
Until companies know the details of the cash flows of their operations they cannot spend their money. They cannot calculate their cash flows until they know what the participation terms will be. This is the kernel of the case. The Government have killed the equity market for major development schemes in the United Kingdom Continental Shelf. They know that if the equity market is killed and if companies cannot increase their equity base they cannot go to the market for loan capital. It is only the very large companies which can hope to finance without recourse to the banks. Without bank money, development has become impossible.
The country is entitled to ask—what on earth is going on and what is the purpose of the whole exercise? One explanation which is certainly going the rounds is that the Government are not now prepared to put up as much new cash to finance participation as the Minister of State indicated they were prepared to put up six months ago. We were told in Committee that the original plan was to spend up to £500 million in 1976–77 and the same again in 1977–78.
However, after months of negotiation I am now given to understand that the Government have recently put forward entirely fresh proposals embodying a far smaller input of cash by them. In some cases the offer amounts to no more than a long-term sale and buy-back arrangement for the 51 per cent. of oil. The BNOC takes 51 per cent. of the oil and sells it back on a long-term contract to the company at a price which will secure to the company the same post-tax return as it would have received without Government participation. That would satisfy the "no better and no worse off" pledge which they had given.
I put that proposal as a possibility to the Minister of State in Committee, and received the firm answer:
It would be untrue".—[Official Report, Standing Committee D, 15th May, 1975; c. 69].
The Sunday Times put that proposal to the right hon. Gentleman during an interview and the author of the article wrote:
The idea that participation should be reduced to a paper transaction in which BNOC acquires half the oil and immediately sells it back (widely favoured in the Treasury)


—I bet it is—
he rejects as a mere 'charade'.
Of course, he is quite right; it is a mere charade. But I am given to understand that it is precisely such a charade which the right hon. Gentleman's officials at the Department are now putting to some of the companies as one way in which they propose to achieve participation.
I ask the Secretary of State—is this true? This debate gives him an excellent opportunity to answer that question. The Secretary of State may, for the purposes of his hon. Friends below the Gangway, condemn it as a"charade", but is it true that his Department is negotiating with some of the companies on precisely those terms? If it is, Labour Members must realise that it is in order to support such an empy charade that all the difficulties and tribulations which I referred to a moment ago are now being suffered; it is for that reason that enormous damage is being done to the industry's confidence and to the momentum of development.
When unemployment comes to the platform yards, whether it be at Graythorpe, Nigg Bay, Kishorn, Ardyne or wherever, the direct cause will be the Government's damaging obsession with participation and their determination to go on with it even if it is to be only an empty charade. It is time that Labour Members who carry their complaints to the Secretary of State faced up to the situation.
The long-term cost of delay is even more serious. If we lose just six months, the cost to the balance of payments will be an extra £2 billion across the exchanges with an annual cost in interest getting on for about a quarter of a billion. As a result of the Government's policies we are likely to have lost a great deal more than six months. It is nearly a year since any major plaform order was placed. It is over a year since any major financing scheme was announced. When the Secretary of State, as he no doubt will, boasts of the new discoveries made in recent months, let him ask why no oilfield which has been declared commercial since the October General Election has yet had a development plan announced for it, let alone any orders given. There has not been one. The

delays caused by participation are already costing Britain dearly.
However, all we get from Ministers is the complacent euphoria of the Prime Minister in the City, the strutting braggadocio of the Foreign Secretary at Luxembourg and the folie des grandeurs of the Secretary of State as he sits with his blackboard in Thames House South concocting absurd proposals for an international conference of State oil companies to be hosted by the BNOC. The country deserves better than this. If the Government are not prepared to face the realities of our oil situation it is time they made way for a Government who are.

4.19 p.m.

The Secretary of State for Energy (Mr. Anthony Wedgwood Benn): I greatly welcome this debate. There is one matter I should like to mention straight away. The right hon. Member for Wanstead and Woodford (Mr. Jenkin), who used such highly coloured language last week about our offer to acquire assets from the Burmah Oil Company, having chosen this debate made no reference whatever to that matter. If something which brought him to his feet with near-hysteria last Wednesday should have passed from his mind by Monday, how much attention are we to give to the fresh anxieties which he has thought to put before the House today? His speech today indicates that in dealing with oil policy he follows the headlines. If it is not in the headlines he drops it, and if it is in the headlines he tries to give some credibility to Fleet Street's search for daily circulation.
I want to come first to the subject of this debate. The Government's oil policy is central to their economic and industrial strategy. I know of no Minister who has ever said—certainly I have not—that offshore oil solves the nation's problems. Ministers who have said that are entirely creatures of the right hon. Gentleman's imagination. But I also know few people who do not believe, as we do, that, properly used and sensibly controlled and with the benefits fairly distributed, offshore oil can help to transform our prospects.
There is a sharp difference between Government policy and that of the Opposition and an even sharper one between the record of the last Government—on which I propose to say a few words—and the intentions and approach


of the present Administration. But before I come to such points in the right hon. Gentleman's speech as merit comment, let me restate, for the benefit of the House, the Government's objectives in their offshore oil policy.
The first objective is to ensure that the benefits of offshore oil accrue to the British people as a whole—in marked contrast to the record of our predecessors. The second is to develop these resources at the optimum speed, taking account of economic, environmental and energy considerations, in partnership with the operators, whose investment and technology are needed for that purpose. The third is to build up that partnership by participation in existing and future licences on the basis of good faith and good will.
The fourth objective is to establish a really effective BNOC as a national oil company to act as a partner in the participation arrangements and to develop it into a strong organisation with a capability, here and ultimately abroad, for comprehensive operations in the oil business in exploration, refining, marketing and downstream activities. The fifth is to use the offshore oil discoveries to build up a powerful industrial capability over the whole range of the oil business to meet needs here and in world-wide export markets. The sixth is to retain control over these resources for our own people, working with the companies, as I have said, with good will and good faith, discussing energy policy in the International Energy Agency and the EEC, constructively but with the ultimate control of these resources remaining with the British people throughout the United Kingdom Parliament and a Minister answerable to them through the House of Commons. Those are the objectives by which we seek to be judged. I want to make a progress report on the achievements and on the problems which confront us in implementing the objectives.
However, I cannot allow the retirement of Lord Balogh as Minister of State to pass without a personal reference to him. At a time when he was highly critical—properly so—of the handling of these matters by the Government of which the right hon. Member for Wanstead and Woodford was a member, he was very much alone initially in drawing public

attention to the scandalous mishandling of these resources by that Government.
I am very proud, both politically and personally, to have served in the Department of Energy with him—a distinguished economist and public servant of more than 40 years' experience in this country and a man who, as a Minister, devoted his entire time and effort to the implementation of the policy that he did so much to fashion. In his new freedom, when he will no longer be a Minister, I certainly intend to retain him as a special oil adviser. Although I am not able, or do not intend, to announce the board of BNOC today, when it is announced Lord Balogh's name will be among those who serve on it.
When history comes to be written, I believe that the right hon. Member for Wanstead and Woodford will be not criticised so much as forgotten and that Lord Balogh's contribution in alerting the British people to what happened under that Government will long be remembered as notable. I shall come in greater detail later to the failures of the previous Government.
I come now to a progress report upon the Government's policy. First, I turn to the Petroleum and Submarine Pipelines Act. I share with the right hon. Gentleman an anxiety about the problems of printing the Act. I have raised this matter and I think that he was right to refer to it. We intend to bring the Act into force on 1st January. Those hon. Members who sat on the Committee will know that my hon. Friend the Member for Lanarkshire, North (Mr. Smith), now properly rewarded by his promotion to Minister of State, discussed the Bill in detail with the operators as it went through Parliament.
The picture that the right hon. Gentleman always seeks to paint—of oil companies in disarray because of Government policy—does not conform to reality. His trouble is that he reads their Press releases day by day to fight their current battles for them, when in fact they are engaged—I make no complaint about it—in a negotiating position from time to time with the Government of the day. The right hon. Gentleman's account of their total confusion and uncertainty bears no relation to reality—

Mr. Patrick Jenkin: rose—

Mr. Benn: Even a cutting from the Wanstead, Woodford and Redbridge Observer about what they think of the Government's policy will not convince me, even if he can find it among his cuttings.

Mr. Patrick Jenkin: It is in fact a cutting from The Times. It is a direct quotation from the retiring chairman of BP, for whom I hope the right hon. Gentleman has some respect:
BP had still not finally agreed terms of the Government's proposed 51 per cent. participation in its North Sea fields, Sir Eric said.
He added: 'We have been having a continual but rather desultory exchange with the Government. BP is not dragging its feet. We are trying to finalise the matter. It rests entirely with the Government.'

Mr. Benn: If I dare say it, the right hon. Gentleman is too good to be true. BP has been owned to the extent of 51 per cent. by the British Government since 1914 until 1967, and is currently, if one includes the Bank of England holding of the Burmah shares, owned to a greater extent. So if Government participation in an oil company is such a disaster, can he explain the success of BP since 1914, when it was brought into public ownership by Winston Churchill? The right hon. Gentleman cannot tell the oil from the rigs or the wood from the trees or the statistics from the reality. It was a very poor effort to try to make much of that in his speech.

Mr. John Prescott: Will my right hon. Friend use the powers in the Petroleum and Submarine Pipe-lines Act to improve the safety of the workers on the rigs, particularly to put right their dangerous working conditions, and extend the rights of trade union recognition and the trade union charter on those rigs?

Mr. Benn: My hon. Friend may not be surprised to learn that I have a special passage on this matter to which I shall come in a moment, if he will allow me to develop the argument in the order in which I had prepared it.
We now have, under that Act, a framework of regulations for the development of these resources which was entirely lacking when the previous Government were in power. We also have the petroleum revenue tax, also negotiated

with the companies. With the royalty and corporation tax provisions, this will bring £3 billion to £4 billion cumulative to the Exchequer by 1980 and £2 billion to £3 billion a year thereafter.
The right hon. Gentleman has a double responsibility because he was a Treasury Minister and then briefly an Energy Minister in an administration which entirely failed to introduce—

Mr. Patrick Jenkin: No.

Mr. Benn: —entirely failed to introduce a proper PRT system. It has fallen to this Government to provide the arrangements, with the special provisions for the smaller fields, the ring fence provisions and the provisions for amortisation and fair return. We have remedied the scandalous neglect of the Government of which he was a member in the two relevant Departments. Had we ignored this problem there would have been an explosion of anger directed at the poor stewardship that the right hon. Gentleman himself, in a special sense, exercised when he had responsibility for these matters.

Mr. Patrick Jenkin: The right hon. Gentleman was not present during most of our Committee sittings. Therefore, he may perhaps be excused for not recognising how far the Labour Party came to acknowledge the commitment of the previous Government, in the light of the Public Accounts Committee Report, both to taxation and to controls, The one thing with which we will have nothing whatever to do is 51 per cent. participation.

Mr. Benn: All I can say is that if the right hon. Member were in favour of it all along, why did not the previous Government do it? The answer is that they never had an oil policy, which leads them to redouble their attacks on us in order to cover up the failures for which they were responsible.
I do not know whether the right hon. Member believes in participation, or whether he advocated it in the corridors of power when he was in office, but in our view taxation is not enough in itself. If we are to benefit long term by this, there must be a partnership arrangement through participation. We have set 51 per cent. as an objective for future and existing licences. For existing licences,


given the tax provision, we have said that our objective is not to acquire more money for the Government through it, and that is how the "no better, no worse" provision in existing licences came in to being. It is not an agency for increasing revenue, and we have chosen the voluntary route. We have made proposals to the oil companies and some have agreed in principle, including BP, some have made counter-proposals and it is correct to say that some have not responded at all. Negotiations are in progress and they are of course centring around some of the matters to which the right hon. Member referred—such as buy-back provisions, progressive development, financing and future development. Of course this is a part of the process of negotiation and discussion. In negotiations of this kind the outcome will depend on the circumstances in individual cases but we shall press and argue and I hope persuade the oil companies that participation, which has been accepted world-wide, represents a sensible and proper way of dealing with the host Government in this country. I am confident that we shall succeed although I can see that in trying to remedy the disadvantageous way in which the previous Government gave the licences, we have a long way to catch up.

Mr. Peter Rost: May I ask the right hon. Gentleman about the cancellation of his proposed visit to the United States to discuss participation with American companies? The suggestion has been made that the decision to cancel was not made voluntarily by the Secretary of State himself but was an attempt by the Government to continue the stance that not he but the Chancellor of the Duchy of Lancaster is in charge of the negotiations. Will the right hon. Gentleman clear up the confusions and vague rumour about the cancellation?

Mr. Benn: I would have thought it pretty apparent that, during the week I was due in the United States, discussions with the Burmah Oil Company were reaching a climax. The hon. Gentleman might have noticed that Mr. Alastair Down and myself were due in the United States, and we both cancelled our visits to allow us to continue our discussions together. The Press reports were based

on the necessity to provide an opportunity for me to continue discussing these matters in this country. I shall be fixing my renewed visit to the United States as soon as I am able to do so—I hope early in the New Year.
The case against participation would not be argued in any other national Parliament in the world except this one, because everyone else has adopted participation. They have accepted, that with a resource as important as oil, control of it is needed, and that technological and economic knowledge of the industry is needed by the Government which is possible only by partnership in the operating committees. Most other oil-producing countries have moved in this way and we believe it to be right. I would be very surprised if the right hon. Member for Wanstead and Woodford were ever charged with those responsibilities, which I doubt, would he in any way attempt to abandon the object of participation which is fully understood by the oil companies and which is the only way in which this country can establish a real position in the oil industry.

Mr. T. H. H. Skeet: Surely the right hon. Gentleman is quite wrong. He has mentioned the position abroad, but Australia, Norway, and many other countries, have refused to accept retrospective action in their licences—and that is not the form of participation that he is recommending.

Mr. Benn: We are engaged in discussions of a voluntary character and that is fully accepted. It is true that the hon. Member's Government gave away so much in such unfavourable circumstances, that we have had to seek to remedy some of the damage which was done then.
The BNOC represents the national capability to which I have referred. Every country, except the United States, has adopted the approach of establishing a national oil company to be, in our case, a key partner in participation talks. It is a public corporation which will be linked to Government through two officials on the board, a device adopted by many other countries over a wider range of the public sector. It will have its executive and commercial tasks, its agency functions and advisory rôle. The first task of the BNOC will be an


organising task and will be discussing with Lord Kearton and with the Board, whose names I hope to announce soon, the strategy of the BNOC. It will be borrowing experience in partnership, not only from the NCB (Ex) function but, subject to the negotiations with the Burmah Oil Company it will be acquiring all or part of its North Sea assets. It is in that connection that the BNOC will be operating.
I turn briefly to the industrial capability, which is an integral part of this operation. The Offshore Supplies Office established by the previous Government in a skeleton form, has been developed and moved to Glasgow. We have the new Industry Act, the National Enterprise Board, planning agreements and development agencies as resources at our disposal to give strength to this industrial effort, and there is a big task to perform towards this country. I pay tribute to my hon. Friend the Minister of State, who has negotiated with the offshore operators a memorandum of understanding designed to bring orders to this country on the basis of equal opportunity. This will create jobs and capacity we shall badly need.
I turn now to the question of trade union representation, because it is crucial that, in the development of this new industry, from the beginning there should not only be good labour relations but that the trade union rôle should be accepted as being in line with the objectives of this country and its traditions and, indeed, of the Government of the day. I will turn first to the question of safety in this context because sometimes people think that trade union interest is simply concerned with wages, but everyone in industry knows that the first responsibility of trade union representatives is to see that safety requirements are laid down and met and where defective are remedied.
I do not have to say that this is a new industry with new and special risks which involves special care in safety matters, and I believe that the development of trade union representation, which I shall try to promote and encourage as best I can, is an integral part of that. In difficult questions of certification of rigs, where I have had to provide certain exemptions for risks which will be familiar to the House, I have sought to

consult the TUC because I think that the interest and rôle of the trade union movement here is perhaps the strongest of all. There are problems of trade union organisation. It costs £2,000 an hour to run a helicopter, which makes it harder to get trade union representatives on to the rigs, and, in consultation with the Inter-Union Offshore Oil Committee, the STUC and the general secretaries of the relevant unions, I am prepared to do what I can in that respect.

Mr. Tam Dalyell: I think my right hon. Friend knows of my particular interest in the matter following the fatal accident inquiry report into the death of my constituent, John Clark. Is it part of the policy to study fatal accident inquiry reports—I am sure it is—to see what went wrong and to try to do something about these harrowing circumstances?
Secondly, there is the issue that diving instructors, as I understand it, at Loch Linnhe and elsewhere are being paid rather less than many of those who attend the diving schools because of various financial regulations in Government policy. Could something be done to help the diving instructors, and also to help qualified people to become diving instructors, and to see that they are all adequately rewarded? I acknowledge that this is a tricky problem.

Mr. Benn: My hon. Friend has kept in touch with me on this matter. He has referred to the tragic death of a constituent. The question of remuneration of diving instructors is for the Training Services Agency, and I understand that there are problems which have to be dealt with. On the question of conveying information to the companies as a whole, we immediately inform everyone. I will give an example. There was the recent case of hyperthermia. We immediately informed everyone concerned because this had not been seen as a hazard. We do our best in circumstances of this kind, but I agree that more needs to be done.

Mr. David Crouch: Before the right hon. Gentleman leaves the question of safety, perhaps he is going to deal with the other liaisons and consultations that he has had. We are interested to hear that he is consulting


the trade unions. Is he also in consultation with the Department of Health and Social Security and the Ministry of Defence? Some of us have had the opportunity to talk to the Royal Navy about diving problems. I had a meeting in Portsmouth some months ago. We appear to have reached the limit of medical knowledge about what happens to men operating at such depths and for such a long time as is possible in the North Sea now. I agree that it is primarily the responsibility of the right hon. Gentleman's Department, but we should like to be assured that he is having interdepartmental consultations in order to penetrate further into such knowledge.

Mr. Benn: The hon. Gentleman is right. This operation is at the frontier of technology and the known limits of human endurance. There is a parallel in aviation medicine, in which the availability of information from space research has to be used to the full. In the same way, the knowledge available through naval research must be made available. If the hon. Gentleman has any indication of defects in consultation, I should be happy to take the matter up, but I understand that at this level a great deal is being done.
I want now to turn to one other point to which the right hon. Member for Wanstead and Woodford made no reference—the next round. During 1976, we aim to be able to license new blocks and we are considering the precise terms, taking account of best performances, and there are certain issues linked with that, such as the arbitration with the French and the negotiations with the Irish Government about dividing lines. All applications will be considered.
I do not know why the right hon. Gentleman made such a mockery of State oil companies. Both the Japanese Minister and the Swedish Minister whom I have seen were representing State companies interested in North Sea development. Why the right hon. Gentleman chose to mock such companies passes my imagination. All countries which are interested in the development of resources use oil companies which represent their interests.
I want to turn now to real problems which need highlighting. One is the hiatus in ordering platforms. I must make clear, since the right hon. Gentle-

man lives on promoting rumour, that there is no question of having to wait until 1977 before further orders are made. The right hon. Gentleman should read not just the headlines but make inquiries in some detail. The problem at Graythorp is that there is work until summer 1976, but that, in order to carry the work through without gaps, we would have needed further orders in 1975. Nigg Bay goes on until spring 1977.
Genuine technical uncertainties are involved. Construction techniques are being looked at again; decisions have to be taken between steel and concrete. There are other examples. To attribute evey single hesitation, whatever the cause, to Government policy, or to suggest that the speeches by Lord Balogh determined the precise date on which orders for rigs were made is to do less than justice to the problems we have in trying to develop our capability and to match and marry it into the needs of the oil companies.
I repeat that I have never said, and that no other Minister has said, that Graythorp will have to wait until 1977 for a further order, and I would be grateful if the right hon. Gentleman would withdraw his allegation.

Mr. Patrick Jenkin: Much as I wish I could in the interests of the workers employed there, I cannot. The trade unions wrote to my hon. Friend the Member for Cleveland and Whitby (Mr. Brittan) saying:
You can imagine the dismay and shock this same work force felt when told no more orders until 1977. Redundancies at Christmas or mid-summer 1976.
Are the unions there telling untruths, or have they misunderstood the position? What comfort can the right hon. Gentleman give them?

Mr. Benn: The right hon. Gentleman had better believe me when I say that, having seen the STUC, the companies, the general secretaries of the relevant unions, the offshore managements and the shop stewards and other groups, at no stage during those meetings did I say that there would be no further orders for Graythorp until 1977. It may be that the letter to which the right hon. Gentleman refers is based on a misunderstanding. What I said was that we needed orders in 1975 in order to guarantee a follow-on


when the present rig building at Graythorpe runs out in July 1976. But I am sure that when I correct him the right hon. Gentleman does not want to give fresh life to false rumour. When I am able to say so authoritatively to him, on the basis of my inquiries with the oil companies, that we expect orders in 1976, what motive could there be but sheer destructiveness on the part of the right hon. Gentleman in trying to create disarray among people who have genuine interests that has nothing to do with Government policy?

Mr. Patrick Jenkin: rose—

Mr. Benn: No. The right hon. Gentleman has made his speech. I think that he had better be prepared to listen. Will he withdraw his remark?

Mr. Patrick Jenkin: If the right hon. Gentlemen is right, and if he is now holding out prospects of fresh order for Graythorpe in 1976, no one is better pleased than I, but I shall believe it when I see it.

Mr. Benn: I suppose that I cannot get a less churlish response from the right hon. Gentleman. I have waited half an hour, so I suppose I shall have to accept that one.
The second problem is cost escalation. Large sums of money in capital are involved. There is the problem of inflation, which is not confined to this country. There are technical innovations to be studied, and there is competition for finds. There is no doubt that the North Sea is an intensly valuable oil province. There is undoubted need for its oil, and it will be a highly profitable operation in the best of the fields. Our tax provisions are designed to safeguard fields which are not so immediately profitable. We are confident that we shall sustain the best and be of assistance in the next round.
I had prepared a section on the difficulties experienced by certain oil companies, notably Burmah, but since the right hon. Gentleman did not think it necessary to refer to Burmah at all, perhaps I need do no more than briefly repeat what I said last Wednesday, that in the 1974–75 support operation Burmah approached the Government, the Govern-

ment made an offer to acquire the BP shares, the company had to make a decision whether to accept it, and had it decided not to accept, the consequences would have been for the company best to assess. It was a fair price, and we have now extended the guarantee. We have offered to purchase all, or a substantial part of, Ninian and Thistle, and it is for the board of Burmah, which remains entirely in charge of its operations, to decide. Negotiations are in progress.
But at least we have the British National Oil Corporation to discuss matters with Burmah. Indeed, I am not surprised that the right hon. Gentleman did not refer to it in his speech, since the alternative would have been either to refuse the offer of help to Burmah or, as he would no doubt have preferred, to sell the North Sea interest to foreign State oil companies which would have been very happy to buy from Burmah its North Sea asset. The idea that it would have been right to sell it, for example, to some European State oil company but not to seek to acquire it for BNOC only proves to me that the right hon. Gentleman has not thought out his position on this matter.
I come now to a short section of my speech devoted to points made by the right hon. Gentleman. I drafted my speech this morning and I had in mind eight points which he might make. In fact, he made three of them. One was his reference to the energy seat. The right hon. Gentleman did not make clear whether he thought it right that Britain should be represented at the energy conference, at the CIEC. If he thinks that it was not right to try, I take it that he ought to be pleased that the Community declined to let us have the seat. In fact, of course, it was right to try, my right hon. Friends were right to try, and I regret, as they do, that they were unable to succeed.
Next, the right hon, Gentleman introduced an argument about confidence. If the oil companies took much notice of what he says, they would be pulling up their rigs and leaving. The truth is that they do not, because they see in the North Sea an opportunity to develop a rich oil province, the benefit from which will be shared fairly between the British


people and themselves, and the delays to which reference has been made do not justify the right hon. Gentleman's criticism.
I have already referred to the right hon. Gentleman's collection of cuttings. He is always there with a yellowing clipping to tell us that all is wrong. I warn him that anyone who reads the Press knows that one day all is bonanza and the next it is fiasco, that one day it is triumph and the next disaster, that one day it is a scandal and the next salvation. The trouble is that the right hon. Gentleman reads the newspapers only every other day. He ought to do better than that. I could produce endless cuttings about how the state of our nation will be transformed—not just from Ministers but from journalists who have to sell newspapers. The right hon. Gentleman must do better. So far, he has not done well enough.
I shall not be as offensive to the right hon. Gentleman as he tried unsuccessfully to be about me, but let us be clear. Under his Government there was no special tax provision for North Sea oil, there was no depletion control, there was no participation, and there was no national capability built up. Because of those omissions, the right hon. Gentleman has to scrabble through his cuttings file to find ways of justifying the omissions.
Perhaps I could properly ask the right hon. Gentleman some questions. Would his Administration, if it ever came to power, abolish the BNOC? Would it sell off BNOC's assets abroad? Would it end participation? Would it repeal the Act? Can he imagine what would be the reaction if he called in the Seven Sisters and said "We are selling off our assets, we are closing down BNOC, and we are stopping participation"? They would think that he was off his head. Of course, that would not be done, and the right hon. Gentleman takes refuge in damaging gossip and the undermining of confidence in order to establish a case.
Let us have the facts clear. From the very early days, oil and politics have been closely intermixed. From the days of John D. Rockefeller and Standard Oil, when Winston Churchill took a majority holding in the Anglo-Persian Oil Company, and when Sheikh Yamani from the very beginning recognised the relationship between the American and the Arab

world, with Britain in the middle—all have recognised that oil is the lifeblood of a modern nation, that it is a currency and a source of industrial growth.
The oil companies have never been private enterprise in the sense that Adam Smith visualised it. I sometimes wish that the right hon. Gentleman would have a word with his right hon. Friend who evidently does the think pieces for the Shadow Cabinet and be persuaded to acknowledge that the major oil corporations which span the world have always worked closely together and long ago repealed the laws of supply and demand. They work very closely with Governments, with industry and with the oil-producing countries. They are estates of the realm, if not realms themselves, and they are properly the subject of international negotiation and negotiation with nation States provided that there is good faith and good will between the negotiating Minister and the company concerned. They expect any British Government to conduct an oil policy comparable with the one which we are now conducting, and if there were to be any turning tail on the existing policy such as that which the right hon. Gentleman suggests but never actually advocates, no one would be more surprised than the oil companies whose interests he has been mistakenly, in my opinion, seeking to promote in his speeches.
I do not wish to detain the House much further, so I shall say only a little more. The link between oil and politics applies nationally and internationally. I do not know whether there are any SNP Members still in the Chamber. [An HON. MEMBER: "Yes."] I see that there is one such Member within earshot at least, and I think that that is rather lucky for him, because the people of Scotland would have been interested to learn that the SNP was not represented throughout our debate on oil.

Mr. Gordon Wilson: I am here and I am listening.

Mr. Benn: I understand that the hon. Gentleman speaks for all, and all speak for each. I put it to him genuinely and sincerely that it is a limited view which his party takes when it says that the United Kingdom can parcel out its energy resources on a geographical basis. The truth is that good sense in the use of our energy resources, be they oil, coal,


gas or nuclear, lies in seeing that they are United Kingdom resources and that we should seek to defend them as such. That is the best possible service which we could perform for the Scottish people as well as the English and the Welsh in Great Britain.

Mr. Gordon Wilson: I am grateful to the right hon. Gentleman for bringing me to my seat within the Chamber. Is it not in the best interests of the Scottish people that the resources which lie off our coasts should be used for the benefit of our people in Scotland? There is no reason why the right hon. Gentleman should gainsay that if he is a democrat. If he maintains that oil which lies off our coasts is not a European asset but is a United Kingdom asset, then, if the Scottish people will it so, why should it not become a Scottish asset?

Mr. Benn: The hon. Gentleman has not thought the matter out. Is it his view that the oil off Aberdeen should be applied only to the Grampian Region and not to Strathclyde and West Central Scotland? Does he draw a pencil line on a map long established and determine which resources should be reserved for which? We have sought to safeguard the interests of the Scots, of the English and of all the people of the United Kingdom in providing an oil policy for the whole United Kingdom. I do not wish to indulge in too long an argument with the hon. Gentleman, but I cannot believe that the course which he advocates is in the interests of the people of Scotland—and I say that with 51 per cent. Scottish blood in my veins.

Mr. Gordon Wilson: I suggest that in that case the right hon. Gentleman ought to take up domicile immediately in Scotland, in view of the current election results. But, seriously, would he not agree that the reason why the pencil line can be drawn is the reason of history, that Scotland is a nation, not a region?

Mr. Benn: But then the hon. Gentleman gets into argument about the Shetlands and other considerations. I am only saying that oil and politics are and always have been closely mixed, and I suggest that the hon. Gentleman would be well advised to recommend his party to see the value of our energy resources in

terms of the first charge, that is, to see that the British people as a whole have the benefit of those resources.
That applies internationally, too. The IEA has an important rôle to play in safeguarding the oil resources of Western Europe and the developed world. The EEC needs to adopt a constructive approach towards energy problems. The new economic order, of which much is said now, is a way of saying that oil has shifted the balance of power in favour of oil producers. In that new economic order we see a shift in the balance of power and influence, I hope, towards the British people in the development of their own resources.
But energy policy is not confined to oil. We have not spoken today, as we did last week, of coal, gas or nuclear energy, but we want to use our energy to re-industrialise the United Kingdom in exactly the same way as the oil producers, once they had access to their oil, wished to use their oil resources to industrialise their own countries. There is no point in mocking that aspiration. It is the sensible approach to the use of those resources. In the end, it is a test of will. This Government have the will and the policy, and I invite the House to support them.

5.1 p.m.

Mr. J. Grimond: I was much interested to hear that, as I understand it, the Benns are now 51 per cent. and the Wedgwoods only 49 per cent., and that the Secretary of State is about to be nationalised by the Scots.
Along with others, I congratulate the new Minister of State, and I should like to say a friendly farewell to Lord Balogh. When Lord Balogh first came to this country he was an associate of my father-in-law, and I have know him off and on ever since. I cannot remember any political or economic subject on which I ever agreed with him, but he is a highly agreeable man in other ways, and I wish him well.
It is very awkward to have to say anything critical about appointments, because it is inevitably apt to be construed as personal. However, I think that the constant appointment of retired politicians and civil servants to very important and technical boards is a pity. I shall say no more about that.
I made many speeches on the Petroleum and Submarine Pipe-lines Bill during its passage through the House. I have no doubt that hon. Members will be relieved to hear that I do not intend to repeat them all. My attitude remains unchanged, but certain things have happened since the Bill was passed. First, we have had the White Paper on devolution. I do not want to repeat the arguments about Scottish oil, but there is one dangerous feature in the White Paper. It is that the Scottish Parliament will have considerable powers to recommend expenditure—not enough powers, in my view, but considerable—but it will have virtually no powers to raise money, except indirectly in a most unpopular way through the local authorities.
There would be a considerable psychological gain in giving Scotland, particularly the North of Scotland, some control over its own assets. The White Paper strengthens my case on that. I believe that it would do something to right the imbalance between the powers to propose expenditure and the powers to raise money of the Scottish Assembly, as proposed by the Government, if it were given some control over the oil revenues.
The next development to have taken place is the steep increase in the price of fuel oil and paraffin. I do not need to tell the Government that that will hit a number of people very hard. In my part of the world we have always had to pay more for fuel, and we have been told that it is because we are so far from the source of supply. I only hope that when the oil begins to flow we shall not still be told that. I ask the Government to consider such increases carefully in future, because there is a case for saying that putting so much of the increase on fuel oil and paraffin and so little on petrol may hit certain activities and people in an undesirable way.
The third new matter is the development over Burmah. I have always been frank about Burmah, which I believe got into trouble through being badly directed. But it struck a series of unlucky accidents. When it obtained a judgment for large sums of money for the destruction of its assets in Burma, a special Act of Parliament was passed, a measure which was not opposed by the Conservative Party, to overturn that judgment. Because of

the accidents the company has suffered, there may be a case for a special look at the whole Burmah situation, though as a shareholder I must be fair and say that the primary trouble with Burmah was that its management was apparently not very successful at the relevant times.
As to the energy conference, I believe that we should have asked that the spokesman for the EEC should be British, as we are the main EEC oil producer. We have done ourselves long-term damage to little purpose by asking for separate representation.
There is one other matter with which the Minister may not feel able to deal directly, but which is certainly important. What is now the likely production of the new Yorkshire coalfield? There have been rumours that owing to subsidence which might be caused, particularly for railway lines, it might be more difficult to develop the coalfield than was thought. It is worth drawing attention in oil debates to the existence of the coalfield, because it is a large source of energy that is frequently forgotten.
I come to some of the figures which have been bandied about during the debate. The right hon. Member for Wan-stead and Woodford (Mr. Jenkin) has the enormous advantage of being an accountant and of having been at the Treasury as well as knowing about oil, and he no doubt understands the figures that he talks about. I have grown very suspicious of them. I attended the opening of the new power station in Orkney, which I need hardly say is not one of the largest in the world. The person who opened it was unwise enough to give us the figures for the production that would emanate from it. I was sitting next to the chief engineer of the Hydro-Electric Board, who pointed out that if the power station produced the electricity that the opener said it would produce its production would be slightly in excess of the whole production of the United States.
I also went to the opening of the oil pipeline, and heard the Prime Minister tell us the value of the oil in the North Sea. He got tremendous applause. I was sitting next to the directors of some important companies at lunch afterwards, one of them a financial director, and I asked "Is that really all that it is worth?


It is hardly worth getting. Whisky is far more valuable." They said that it was a very difficult calculation, but implied that the Prime Minister's figures were right. We now know that he was £198,000 million out.
I do not want to be given complicated figures, but it would be useful, at any rate to me, if we could be told the price per barrel on which the figures given by the Secretary of State on the revenue side are based. I think that $7 per barrel was mentioned in the recent conversations. That is less than the price on which most of the calculations have been made up till now.
How much will there be in surplus over the amount we already owe in interest on the public sector borrowing requirement? On the figures of the right hon. Member for Wanstead and Woodford, the borrowing requirement would nearly eat up in interest all the expected revenue to the Treasury. That is a very important point, for a variety of reasons. I should like to know those figures.
I should also like to have confirmed the figures in relation to the balance of payments. Am I right in thinking that the right hon. Member for Wanstead and Woodford said that the improvement to the balance of payments was expected to be about £1,800 million by 1980? If so, huge as that sum is, we should put it in perspective by bearing in mind that the balance of payments goes on, not for 20 or 50 years, but for ever. The contribution of whisky to the balance of payments over the generations is much larger. The Scottish people would be well advised to keep up their interest in that nourishing beverage.

Mr. Patrick Jenkin: Is it not even more important that the English should keep up their interest in that desirable beverage?

Mr. Benn: I hope the right hon. Gentleman is not suggesting that we now launch a series of whisky-powered power stations?

Mr. Grimond: If the Secretary of State for Energy is thinking about setting up a national whisky corporation, I would remind him that I am coming up to the age of 70 and would make an admirable chairman.
I have one or two questions to put to the Government on oil-related subjects. We are glad to hear from the Scottish Office that extra assistance is to be given to local authorities. For example, we desperately need help over housing, which has become a matter for serious concern. Although the Scottish Office maintains that it is not holding back on housing, it has cut the loans for private house building. However, it is not holding back non-productive building; and this is a serious matter when there is no labour to spare in the building industry.
There is another matter to which I have drawn attention on many occasions—namely, the effect of oil on the economy. This problem is beginning to be felt to a serious extent, because the traditional industries are losing employment and all prices are being greatly increased. This matter will work through the economy and we are in danger of making inflation in my constituency very much worse. I hope that, when the oil revenues begin to flow, particular attention will be given to the need to support local industry, agriculture and fishing in the areas affected and that efforts will be made to improve housing, roads and services in general. For example, we are not allowed to make a geriatric centre out of an old folk's home because it falls within the responsibility of a different body from the health board for example, Island Authority. It is a great handicap that money allocated for one purpose, even if it is only a small sum, cannot be transferred to other work. Therefore, local authorities suffer in many respects.

Mr. Joseph Dean: Is the right hon. Gentleman suggesting that in terms of the increased revenues being made available from oil discoveries he is prepared to forgo that portion of preferential treatment for those for whom he speaks in deference to their counterparts in the English provinces?

Mr. Grimond: There are special problems, as well as advantages, flowing from this large oil find, and Ministers have admitted it. Those problems require to be dealt with sometimes in a different way. I am not asking for more money. I am trying to get the Scottish Office to permit transfer of funds from one


purpose to another. I do not believe enough attention is given to this issue.
I should also like an assurance that no change is intended in the Zetland County Council Act 1974, in the passing of which I had some share. Or in the Orkney counterpart. Although the matter is not mentioned in the White Paper on devolution, I understand that there is no question but that this power will still remain with the local authorities. They would like assurance on the subject so that they may be free of uncertainty.
I should also like to know whether there are any proposals to bring to our shores oil from the Norwegian sector of the North Sea. There is a large rift between the Norwegian oil field and Norway. It has been suggested that the Norwegians may wish to bring that oil to Scotland. Is anything known about this? If it is, we should like to be given information about it because it is an important matter.
May we be given more information than we now possess about the disturbing accident in which pipelines came adrift? I do not know how a pipeline, heavily coated with concrete in the constituency of the hon. Member for Ross and Cromarty (Mr. Gray), managed to lift itself off the sea bottom and begin to float away. It is an alarming situation.
The question of that accident brings me to my next point. One of the results of the pipeline coming adrift was that a fishing boat in avoiding the scene went aground. Its owners are having the greatest difficulty in obtaining compensation. This is a continuing complaint over many other incidents. Although the oil companies have agreed to pay compensation for damage and the results of the fouling, it is often difficult, if not impossible, to trace back the matter and to ascertain who is responsible. It is surely unthinkable that fishermen should have to take the BNOC or any other nationalised industry to court. Cannot the Government devise an insurance scheme by which claims are dealt with more quickly than they are at present?
It is disturbing that so little platform building is taking place in the United Kingdom. I am told that in Norway platforms are built much more expeditiously and that delivery dates are better. I do not know whether that is so, but

that is certainly the claim made by Norway. On the subject of supply bases, which is an important consideration in my constituency, I have been told that in the Norwegian bases similar jobs are carried out with many fewer men. We must be able to compete in this international industry, and I hope that restrictive practices in the industry will go. I hope that we shall be given some further information on these matters.
The Secretary of State for Energy did not say very much about the progress in regard to BNOC. I hope that the time is coming when we shall be told a great deal more about the corporation, who is to run it, where it will be situated and so forth. I believe that the corporation is unnecessary because we already have British Petroleum, a body that could be 51 per cent. Government-owned. Therefore, I hope the Minister in replying to the debate will say more about the progress, if any, of the corporation.
I should like to emphasise the incredible difficulty of all oil operations in the North Sea. I listened to one programme on the BBC last night in which the commentator expressed some surprise that the wind had reached the speed of 125 miles an hour in some foreign city where all the roofs had been blown off. The trouble with the BBC is that it seems to know all about what is going on in Bangkok or Paris, but it knows nothing about events north of Watford. In my constituency the wind, alas, often blows at 125 miles an hour. After the weekend's weather, if our roofs had not been good ones we would not have had any remaining at all. To keep a roof on a house is difficult enough in such conditions, but to manage to conduct operations in the North Sea in such weather is appallingly hazardous.
I have been in touch with the Government on the question of danger to divers, and I hope that my pleas are being followed up. The hazards involved in these operations are extensive and uncertain. I hope that the British Government will not make matters more uncertain than they are in any event.

5.17 p.m.

Dr. Colin Phipps: I begin as usual by declaring my interests. I shall not enumerate them because they can now be found in a useful publication


that can be conveniently consulted. I intend to refer to those interests at a later stage.
I wish first to draw attention to the sparseness of attendance at this debate. This is becoming characteristic of oil debates. It was true of many debates on PRT as well as discussions during the consideration of the Petroleum and Submarine Pipe-lines Bill. It seems incredible that in discussing North Sea oil, whether it will be our eventual saviour or otherwise, the subject now creates so little interest, in terms of attendance, on the Floor of the House.
Last week I held a small seminar in the House for some students. They said "It must be marvellous for you being one of the very few oil experts in the House. Obviously when you speak, Ministers take notice." However, if there are not enough people present, a Minister can ignore what one says and it makes no difference.

Mr. John Smith: I am listening.

Dr. Phipps: I am grateful to my hon. Friend, and I congratulate him on his promotion. I repeat that it is a pity that we do not have a better attendance at these debates.
I wish to correct one or two statements made by the right hon. Member for Wanstead and Woodford (Mr. Jenkin). There has been a misunderstanding about the decrease in the number of wildcat drillings. The Government's statement about the number of rigs now operating as predicted is correct. What is happening is that over a period of time amongst the same blocks and the same licences—we have not had any new licences for a number of years—the number of wildcats is reducing and the number of appraisal wells is increasing. The right hon. Gentleman, however, was incorrect in saying that no wildcats are currently being drilled. I know, having had to abandon one because of mechanical difficulties, that wildcats are being drilled. Indeed, there are still wildcats to be drilled in the North Sea. The fact that there are not so many is merely a result of the amount of drilling which is taking place. There is bound to come a time when all the potential exploration sites have been drilled, and at that stage one would

naturally expect to see a fall-off in the number of wildcats drilled. But certainly the test of the international oil industry's interest in the North Sea will be provided by another round of licences, and I shall be extremely surprised if we do not see the international oil industry competing strongly for licences in that round.
A further point worth making was touched on by my right hon. Friend the Secretary of State, and that is the question of the negotiating position of the companies with regard to participation. It would be most unusual if companies currently negotiating participation were to make Press statements stating that everything was going to be beautiful and that they were winning hands down. In fact, it is only in the final stages when they do agree to participation that they are most likely to make any kind of bullish statement at all.
I should like to bring to the attention of the House something which is possibly not known, and it is an illustration of the way in which the present Government negotiations with the oil companies have proved fruitful. I refer to petroleum revenue tax. Looking at the debate on the RPT, one would have thought that it was the worst thing which had been visited on the international oil industry in the history of that industry. In fact, the international oil industry is trying to persuade the Australian Government to adopt the PRT legislation because they believe that that is as fine a piece of tax legislation as is possessed by any country. This is not generally known, but I know it to be the case. PRT legislation in toto has been presented to the Australian Government as a model of what such tax legislation ought to be, and I feel that we ought to congratulate our negotiators on arriving at such a sensible solution.
The final point worth noting in the coments of the right hon. Member for Wanstead and Woodford concerns platform building. I do not want to be too gloomy, but in terms of the future for platform building we must recognise that technically these may be dinosaurs. Indeed, the industry hopes very much that they will prove to be dinosaurs. An enormous amount of work is going on into research on sub-sea completions. I, will not bore the House with the technical


difficulties involved, but if a suitable method of sub-sea completion for major oilfields can be found, platforms will become redundant. I think it must be our hope that this will happen, because it will certainly make the exploitation particularly of the northernmost part of the North Sea very much easier.
The deeper the water, the bigger the platform. It is not just that every extra foot of water adds a proportionate amount to the cost. It adds almost twice as much as the previous foot cost. The increasing cost is exponential with the increase in depth. With water depths greater than 600 feet it will be extremely important that sub-sea completions are brought in. Platform building for any extended length of time—by which I mean a period of time beyond the early 1980s—cannot be expected with confidence, and it is not something to which we ought to look forward.
I referred earlier to my interests, and I should make it clear that I have had two particular interests in the North Sea for a number of years. Quite apart from my own specific involvement, those interests have been to see the formation of a viable British National Oil Corporation in the North Sea operating internationally, a much greater participation of British industry, and the formation and evolution of independent British oil companies. I have always believed that the industry in the North Sea and, indeed, in this country should be a partnership between three partners. Those partners are the Government, in the form of the British National Oil Corporation, the international oil industry and British industry.
I am afraid that there is at the moment some fear that the successful launching of the BNOC may mean that the Government will give less encouragement to the smaller British companies. I admit my self-interest in this matter, a self-interest of which I am proud. I have worked very hard to get small British companies involved in the North Sea. It may be said that I am putting my mouth where my money is, but I can assure hon. Members that I put my money where my mouth was a long time before the possibility of British participation by minor companies was fully developed. There is an idea that because the smaller British companies are finding

difficulty in raising finance, there will be a temptation for the Department to say "We now have BNOC. We have the international oil industry. Surely that is enough so far as British participation is concerned and we can, therefore, neglect the somewhat difficult nascent independent British oil companies". That is merely a feeling which is current in the industry. I hope the Minister of State will be able to allay my fears in this direction.
It is, however, probably worth saying something about the way in which the independent oil industry exists in North America. Outside North America an independent industry is not common. Hon. Members are, no doubt, familiar with the way in which States and Governments operate. They are familiar with the way in which international companies operate. But there never have been small independent British oil companies for which a particular expertise or degree of knowledge could be developed here.
In the United States and in Canada these companies operate very much as exploration companies. It is common for them to put their money into exploration, often in difficult circumstances and in areas at which larger companies have not looked, to make a discovery particularly in the case of natural gas, and for that to be financed by the company which owns the pipeline and by the markets. The companies which are exploring are concerned principally with using their exploration expertise to make discoveries. They then turn to existing capital in the form of the transmission and marketing companies for the finance with which to develop their discovery. Often that finance is forthcoming at low or nil interest rates.
That structure apparently does not exist in the United Kingdom. I believe that the BNOC and the Gas Corporation could play a vital rôle in helping to develop the independent British oil industry, and the independent British oil exploration industry in particular. Many of the small independent British companies view the BNOC very hopefully in this respect. This is a point which I press on the Minister of State to consider. In the next round it is most important that the third part of this partnership consisting of the international oil industry, the British


National Oil Corporation and British industry itself is not neglected but is given a more important part to play.
I turn to the question of 51 per cent. participation in terms both of the current discoveries and of the next round. The Minister is aware from previous speeches that I have made that I am not in favour of a blanket 51 per cent. participation in future licences. I have always believed that the best way for companies to make a bid for licences in any round is to do what is done in many other countries—to make the bid in terms of the percentage they are prepared to give the Government. In that way the Government could get a good percentage in respect of good blocks and a lower percentage for not such good blocks. That would be a satisfactory arrangement. How ever, I accept that if we are seeking 51 per cent. participation in the current discoveries, it is difficult to depart from that figure in future licensing rounds.
There is an important factor in the current negotiations for a 51 per cent. participation. There is a degree of uncertainty over the question of participation which is affecting development. It is not nearly as severe as has been suggested by the Opposition Front Bench, but it is real and the sooner that it is dispelled the better. The way in which the 51 per cent. participation operates in existing finds must be seen to be fair and to be equal. If the BNOC gains its 51 per cent. by purchasing 51 per cent. of the holdings of existing companies and leaves 49 per cent. untouched—in other words, if there were two companies involved, one with a 51 per cent. holding and the other with a 49 per cent. holding and the Corporation merely purchased the company with the 51 per cent. holding—it would be a very unfair way of tackling the problem.
I would much rather see an across-the-board 51 per cent. obtained from every participant in every consortium in the discoveries where agreement is reached. If that does not happen, certain companies will be put in a very privileged position. They will hold out and will say "No" and the Government will then pick up bits—possibly in the market, possibly by negotiation—to obtain their 51 per cent., letting some companies get

away scot-free over the question of Government participation.
It is important that the 51 per cent. participation should be across the board, and I hope that attention will be paid to this matter in the negotiations. If not, we shall give all sorts of ammunition to companies which do not want to participate in any form. They will be able to point to another consortium and say, "They got away scot-free they did not have to give up 51 per cent. of their holding. Why should we have to give up 51 per cent. of ours?"
The final point on which I want to touch—not at length, although it is important—concerns European involvement in the North Sea. The nature of North Sea oil is such that even if we produced a great deal more than we needed it would not be satisfactory to use it to refine the product mix which we use in this country. Our product mix is heavily weighted in the direction of fuel oil and other heavy oils. It will always be to our advantage to import medium or heavy crudes from the Middle East and elsewhere and to use our own premium crude for refining or petrochemical purposes here, or to export. If we are to export, the logical place to export to is Europe.
It is time that we began to involve the countries in the EEC much more closely than we do in the development of North Sea oil. We would not give up our sovereignty by doing that. We might even need to look to Europe, particularly as prices increase and inflation continues, in order to develop many of the marginal fields. It is not too early to begin discussions with Europe about a joint development of many of the fields in the North Sea and to establish marketing arrangements with Europe now because in essence the North Sea is not simply a European source of oil. It affects the European balance of payments, not just the United Kingdom balance of payments.
It would be ridiculous for us to adopt a dog-in-the-manger position vis-à-vis Europe. We need Europe. I want us to use European finance and I wish to see the introduction of European countries into North Sea development in general. We may be the poor man of Europe, but in this case we could be seen to be a poor man bearing gifts.

5.35 p.m.

Mr. T. H. H. Skeet: The hon. Member for Dudley, West (Dr. Phipps) always makes an interesting and thoughtful speech, and I hope that his comments on the Common Market will be closely studied not only by the Minister of State but by the Department. I hope that it is not going too far to suggest that if his speeches are not closely studied he should serve on the Board of the British National Oil Corporation rather than the noble Lord Balogh, who seems to have been divested temporarily of his responsibilities.
The hon. Member for Dudley, West mentioned Australia and the petroleum revenue tax. I was interested to hear him say that the Australian Government are considering adopting PRT arrangements. Australia is different from this country. There is an element of common sense in some of the things that it is doing. It has completely rejected, after comprehensive study, the adoption of a wealth tax, which is being considered in this country. I am not aware that Australia proposes the nationalisation of local oil companies operating in the offshore areas between South Australia and Tasmania, or those in Western Australia. There will be no retrospective arrangements concerning existing licences such as those for which provision is made in Sections 17 and 18 of the Petroleum and Submarine Pipelines Act.
Therefore, the Australians are acting in a much more modest way than the British Government have operated. If they are to adopt a PRT, perhaps they will adopt the solution recommended by my right hon. Friend the Member for Wanstead and Woodford (Mr. Jenkin), namely, introduce a tax, without going through all the bureaucratic arrangements which will lead to great administrative difficulties.
The hon. Member for Dudley, West referred to the British National Oil Corporation. There does not seem to be much expertise in the Corporation and therefore the hon. Gentleman would be a willing and erudite contributor to its discussions and management. I wish that the hon. Gentleman had served on the Committee which considered the Petroleum and Submarine Pipe-lines Bill. There I moved an amendment to the effect that, if we had to have a BNOC, the capital should be subscribed partly by the market

and partly by the nation, in other words, the Government. The Minister of State rejected the amendment, but it would have enabled small enterprises—indeed his own drilling company—to buy shares in the Corporation. The hon. Gentleman seems to be coming round to the idea of the Alberta Energy Company. He may eventually be able to persuade his colleagues to accept my suggestion, but perhaps the Minister has at the back of his mind the fact that the BNOC will not last for many years but will be merged with the British Gas Corporation.

Dr. Phipps: I am pleased to hear that the hon. Gentleman is so confident of the success and profitability of the BNOC that he expects private industry to want to invest heavily in it.

Mr. Skeet: The hon. Gentleman did not listen to my argument. I said that if we must have a BNOC it should be contrived in the manner I suggested. I was not in favour of setting up the Corporation, but the Government were not prepared to accept that. Having one nationalised corporation—the National Coal Board—with considerable investments in the North Sea, the Government proceeded to divest the NCB of all its interests in the North Sea for a song. Instead of paying ample compensation, they wrote off the assets and provided for token compensation, saying, "These will be the assets under Section 2(1)(e) to be handed over to the BNOC".
The Secretary of State is always entertaining. He has a facility for dealing with matters on the surface. He is like a butterfly which flies from twig to twig. Unfortunately, the twigs break. The right hon. Gentleman seldom makes an erudite speech, although he puts points from time to time. This afternoon he enumerated six.
The Secretary of State said that what he was doing would provide a financial and economic framework for oil developments in the North Sea. The Petroleum Development (Scotland) Act 1975 was supposed to encourage the development of sites, but the Act has not been much used. The Government have incurred considerable liabilities. Although the Minister may be satisfied that BNOC has power to place orders and may be able to help some companies in due course, the BNOC has at present only a chairman


and one or two staff and has made no attempt to place orders, even in these days of high unemployment.
The right hon. Gentleman's second argument was based on the Oil Taxation Act 1975, which was heavily contested and vastly improved by the Opposition. That Act by itself would have sufficed. There is to be discrimination right from the start. All the companies will have to pay PRT but BNOC is to be spared. That amounts to unfair competition. In terms of European legislation the Act is unfair and should be revised.
Like my right hon. Friend the Member for Wanstead and Woodford, I am in great difficulty in that all I have is the report of the Committee proceedings on the Petroleum and Submarine Pipe-lines Bill. The printers have not been able to get out the final version of the Act.
Most of this legislation is entirely irrelevant. The three pieces of legislation I have mentioned have not and will not produce an extra barrel of oil, and will do nothing to improve our balance of payments position. They result in the creation of a bureacracy which even the Emperors Diocletian and Hadrian would have admired. I do not expect that in future years much of the legislation will be used.
As the hon. Member for Dudley said, one of the acid tests will be whether the Government are successful in their round of licensing next year. The companies are concerned about participation and the rigorous terms offered. They may be assured by the Minister that much of the legislation will not be utilised although the powers will be retained. If that is so, there was no need to pass the legislation and the Government could have followed the recommendations we put forward.
The next argument put forward by the Secretary of State was that benefit will accrue to the British people as a whole. We heard that before when the railways were nationalised. How successful has that been? Fares have gone up, the rolling stock is old, few new stations are being built and the losses are enormous. For all the nationalised corporations £2,000 million and more has

been written off in bad debts. I cannot see that the British public have had many benefits from British Rail or, for that matter, from any of the rationalised corporations.
The Secretary of State said that the oil will be developed at optimum speed. That seems to conflict with the new model Clause 16 on pro-rationing. It may never be used, and perhaps one can afford to put it aside and say that the Secretary of State was just telling us what was at the back of his mind. He is to establish a British National Oil Corporation of world-wide ramifications although it consists of nothing more than a chairman, probably an office staff transferred from the National Coal Board and a limited capability. Before he thinks of a national all-comprehensive oil corporation, would it not be better to concede that there are facilities round about him which could be used to considerable advantage? The right hon. Gentleman is surely aware that the Royal Dutch Shell group operates in the United Kingdom. There is Anglo-Dutch, which is 40 per cent. British and 60 per cent. Dutch. Many oil companies operate in the United Kingdom and there is plenty of competition in the market. Why not utilise those companies? Why set up a new one?
Many countries have thought it necessary to set up a national corporation, but has not the right hon. Gentleman heard of ENI in Italy? Has he heard in recent years of that State oil company being interfered with by high-level politicians who have tried to persuade it to adopt a certain course? Has he not learned of patronage? Those are examples of the complications which can occur. I know that politics requires oiling from time to time but if complications are likely to result in the political sphere it is surely better to preserve the independence of companies.
A classic case is that of Pertamina in Indonesia which nearly brought dawn the country. It was badly managed, it borrowed too much and the international banks had to be brought in to sustain the national economy. There are many cases which the right hon. Gentleman can contrast for the sake of argument. To set up an international oil


company when there are plenty of competitors in the open market is totally unnecessary for the right hon. Gentleman's purpose.
The final argument advanced by the Secretary of State was the necessity of ensuring that Government control is obtained over the oil. That is an impressive argument. He wants control to ensure that pro-rationing is secured. As I have said many times in the Chamber and in Committee, there will be no pro-rationing for the next five or six years because the Secretary of State has said that he wants to ensure that the moneys are diverted to the replenishment of British industry. The moneys, however, will go into the National Oil Account, little being paid into the Consolidated Fund, so British industry will not be replenished. Is it not apparent that the Oil Taxation Act would have sufficed? That would have given the Secretary of State all the control he wanted. Would not the regulations which have been operating for a few years, with certain additions, have sufficed? Those regulations could have included new model clauses recommended to the companies for their voluntary acceptance. Many of the companies would certainly have accepted them if they thought they were in the national interest.
Was it necessary to include clauses on revocation and clauses about broader restrictions on assignments? Was it necessary to bring in Clauses 14, 15 and 16? They are entirely needless and were brought forward purely to placate the Labour left wing.
The six objectives put forward by the Secretary of State add up to very little. This is a very competitive industry which could have continued successfully winning oil and providing revenue out of which tax is secured.
Turning to devolution—a second Member of the Scottish National Party has now appeared—it is impossible to sustain the prosperity of a nation on the basis of a single commodity, particularly if the price is liable to fluctuate.
My right hon. Friend has suggested one or two figures. He referred to certain figures based on a high oil price of $12 a barrel, but I dare say that in future years the price could fall quite drastically.

That is why Europe is talking about having a base price of between $7 or $8 a barrel. If the price came down to $8 or $9 a barrel we would feel the initial draught.
Therefore it is quite impossible to expect the Scottish economy to run on oil alone, even if it could secure the oil. But, of course, Scotland does not have very much else. Britain has been subsidising Scotland for many years. Scotland is largely dependent on the rich coals which come from across the border.

Mrs. Margaret Bain: Scandalous.

Mr. Skeet: It might also be worth mentioning another factor. I hope the Scottish National Party will take this into account, because the Government and the Opposition appear to be single-minded on this point. If there is to be a regional authority, a regional government, with a jurisdiction of three miles, it is rather difficult to see what control over the oil it would have. After all, Britain has secured its oil for the benefit of all parts of the United Kingdom. The United Kingdom was a signatory to the convention of 1959. The oilfields are sometimes nearer and sometimes a little further distant from the median line, but there are no oilfields within three miles of Scotland which would be within the jurisdiction of a regional authority.
When the Minister himself answered my Question on 12th November 1975, at c. 728 of the Official Report, he listed a number of fields. There was Brent, 85 miles from the coast. Looking down the list, I come to Forties, which is 100 miles from the coast, and Montrose, which is 120 miles from the coast. None of them is within three miles. Therefore, while everybody is looking for ways of overcoming some of the difficulties, it would be quite wrong to assume that complete control of its own oil by any separatist movement in Scotland would lead to any solution.

Mr. Gordon Wilson: Is the hon. Member aware that the aim of the Scottish National Party is to obtain national independence? Is he further aware that, in terms of the 1959 Convention to which he has referred, Scotland would be entitled to the oil lying offshore far beyond the three-mile limit, in the same way as the United Kingdom has it at the


present time? Lastly, has he never read the Continental Shelf (Jurisdiction) Order?

Mr. Skeet: The hon. Member's last point was discussed in Committee at some length. The jurisdiction Order dealt with the judicial system. It did not deal with the allocation of resources.
The hon. Member says that he speaks for an entirely separatist movement. I thought it was. In this respect I think he will lose a lot of encouragement. If he were prepared to recommend that the aim is to eliminate the distance between London and Edinburgh, or London and Glasgow, I could understand some of his arguments. They could be used in relation to many points made on previous occasions. But the movement is now to be separatist, and I cannot imagine Scotland being independent and having only one single resource which is in any event beyond its jurisdiction.
Even if the international convention were to be renegotiated, would the other Powers agree? They would probably refuse to accede to any alteration of that convention, and it would be quite beyond the responsibility of the United Kingdom Government to concede these powers to Scotland.
I have recommended the holding of a referendum but I do not want to spend too much time on that question, except to say that it is not only for Scotland to record its views one way or the other. Wales and England would also record their views. England might well say that it is in the interests of Britain as a whole that these matters shall remain as they are, with certain modifications which might eliminate the remoteness of Government later on.
I move now to another matter on which I deviate very considerably from the thinking of the Government. I refer to the conference which is to be held in Paris on 16th December. The Foreign Secretary said that he wanted a separate seat at the conference. I fail to understand the reason for this. It may be that at some later date he will say that Britain will be a very substantial oil producer and exporter.
I shall be delighted to hear that we are to export a lot of oil from the United Kingdom, because I agree with the hon. Member for Dudley, West that we have a natural market in this respect in the EEC.
Surely, if the Foreign Secretary wants a separate seat, he will have to be prepared to concede a separate seat to Holland as well, because Holland is a very large exporter of natural gas at the moment, exporting more than it is consuming itself. At the present moment we are exporting nothing. I agree that there is inter-European trade in crude oil and products, but I do not think that we have any present claim to a separate seat at the conference.
There will be four commissions, and I have a recommendation to make in this connection. We have very great interests in metal commodity markets and as a financial centre, as well as in our energy capacity. Therefore why cannot the United Kingdom ask to chair one of these commissions?
If we wish to persuade the other Europeans to accept a floor price, are we the right people to put forward the argument to inveigle them into accepting our idea? Would it not be better to stand behind them so that they may be fully implicated in accepting a floor price which is acceptable to us? I hope that the Minister will consider this recommendation with some interest.
I should have thought that the right way to proceed was to calculate exactly what resources we have in the North Sea. We may be satisfied that there is today something of the order of 20 billion barrels of oil, split between the United Kingdom and Norway, with roughly 14 billion or 15 billion barrels to the United Kingdom and only 5 billion or 6 billion barrels to Norway. If that is the case, we are in a remarkably good position. The total ultimate reserve, I understand, may be as high at 35 billion barrels.
With regard to gas, of the total of 90 trillion cubic feet, the United Kingdom has between 40 trillion and 45 trillion, and Norway 25 trillion cubic feet. We are the larger nation and our requirements are greater, and we can see for many years ahead, without any pro-rationing programme, this reserve being


tilised both for home consumption and for export.
Moving from that point, we next have to consider how we are to fit this form of energy into our general resources. We are mindful of the fact that we have an expanding coal industry and want to develop it. Selby is going ahead, and, according to yesterday's newspaper, there are other sites available for development.
It is possibly in the Government's mind that they do not want the North Sea oil development to go ahead too far because it might impede the development of the coal industry. I hope I am wrong about that, but it could be at the back of the Government's calculations. It is possible that they may want to use the BNOC extensively abroad so that it will not interfere with the National Coal Board. But it may be that we shall receive some clarification of that later on.
I can bring some of my ideas to a quick close by mentioning the priorities that I should like to see in any policy endorsed by the Government. We should have an inter-related fuel policy in which all the elements of fuel are considered. But that does not mean the State having to own the lot. It would simply consider them. It should be interesting to hear the arguments of the various sections owning them, particularly the competitive oil industry, which is one of the greatest advantages to the United Kingdom. It also enables us to operate world wide. Here, the BNOC is a total irrelevance.
We have to make up our minds that we have a special responsibility to our partners in Europe, providing that our home market is satisfied and that they are prepared to pay a world price for our goods—in this case, our oil. If they are prepared to pay us the world price, they can have from us what is left over. But to adopt a dog-in-the-manger attitude by saying that we wanted it all for ourselves and that we should ration it in future years would be absurd. Britain must change her views on this important matter.
The other oustanding priority is that our balance of payments, especially our borrowing from abroad, will dictate that we export oil in order to get foreign exchange. But I am on record as saying—I am probably the only member of the Conservative Party to have expressed this

view—that we have to make money out of oil quickly before the price starts to decline. If we lose it at its peak, we may lose it for many years. Everyone is arguing from calculations on the assumption of more than $12 per barrel. Anyone who thinks that this will last in perpetuity is totally wrong.

Dr. Phipps: Does not the hon. Gentleman agree that, because there is the possibility of a fall in oil prices, it is even more important to get our European partners involved in our oil as soon as possible?

Mr. Skeet: I accept that view fully. That is why it is distressing to find the Foreign and Commonwealth Secretary claiming a separate seat at the forthcoming conference. If we want to get Europe thoroughly involved in our proceedings, we can push them from behind. It may be in our interests to have a floor price in the North Sea. If we ourselves assert the argument, others will not necessarily follow us. The French will not do so. But if it is a European measure, the French will be more involved and more likely to fall into line. The hon. Member for Dudley, West has brought up an important point. As it has come from him and from me, I hope that the Minister will bear it in mind.
We have the wrong policy for gas. I remember when we passed the Continental Shelf Act 1964, with Section 9 on non-fuel use. It is of vast importance to the chemical industry. Why does not the Minister allow companies not merely to develop their own facilities in the North Sea but to take it aboard direct without negotiations with the British Gas Corporation? It would make sense, it would cut out the middle men, and it would tend to reduce industrial costs.
I hope that the Minister will remember also that he now has an Act on the statute book, the Petroleum and Submarine Pipe-lines Act, which contains a great many reserve powers. He has been advised by many companies that probably this will lead to the stultified growth of some of the smaller fields. Will not he say. "I realise that we may have been wrong. We are prepared to make amends. Much of this will not be operated in the next five or six years."?
I had a discussion by correspondence in the Financial Times recently as a result


of which I received a letter from a small oil company. Perhaps I may be allowed to read one pertinent paragraph of it:
Prior to the major increased value of oil which began in September 1973, it was necessary to find fields of 300–500 million barrels of recoverable oil to be viable propositions for production. Because of the increased value of oil it probably would have been commercially possible to produce fields of 50–100 million barrels of oil, particularly if they were reasonably near an oil-gathering system. But because of major operating cost escalation, Petroleum Revenue Tax and the threat of Participation, these factors have managed to push the minimum threshold of commercial oil up to 300500 million barrels of oil. This has created a very serious obstacle to developing many known North Sea reserves and exploring for others. North Sea recoverable oil reserves on the United Kingdom side might be increased by 30–50 per cent. should all of the 50–500 million barrel fields be produced. Most of these are not likely to be produced unless Government policy is changed significantly.
This is one of the companies engaged in the North Sea. This is advice which has been given to the Minister, and I take this opportunity to incorporate it in the record so that he and his Department may study it.
Does not the Minister see that the very harsh controls that he is putting on the industry will have long-term effects and could lead to a dwindling of effort in the very area upon which the country depends?

6.6 p.m.

Mr. Gordon Wilson: I should make it clear at the outset that I disagree almost entirely with all that the hon. Member for Bedford (Mr. Skeet) said. In his remarks about Scotland he showed a scandalous lack of knowledge of where Scotland stands in relation to her assets and her potential. I hope that the hon. Member for Ross and Cromarty (Mr. Gray) will take his hon. Friend the Member for Bedford aside and give him a few details about the strengths of modern Scotland, following which I hope the hon. Member for Bedford will on some future occasion admit how wrong he was to underestimate our country.
This debate turns upon whether the Government's oil policies have been correct. I say straight away that it was my hope that the Conservatives, who initiated the debate, would state what their policy was. I have sat through a number of debates of this kind, including

those on the Oil Taxation Bill and the Petroleum and Submarine Pipe-Lines Bill, and, although the Conservative Opposition take stands on matters of detail, I have yet to hear them clarify their policy in terms of its principles. I was hoping that they would say whether they regarded oil as a source of capital or of revenue. Do they prefer maximum output and, if they do, where is their policy about depletion? Is their Oil Conservation Board to be merely a decoration on the oil scene, or do they intend to restrain the rate of production? Have they given any real indication of the level that they consider appropriate as the return to the public purse and of what proportion should go to the oil companies whose interests they so often uphold?
These are questions for the Conservatives to answer. If they are to mount an attack on the Government's policy, they need to state their own position.
However, there is a strong criticism which can be made of Government policy. It is a policy which arises from and which is contained in the various pieces of legislation that they have put on to the statute book. I take as an example the Offshore Petroleum Development (Scotland) Act. We see immediately that very little use has been made of it other than to spend money in a couple of yards without any real gain.
One of the problems—it was put to the Government a year ago, when the Bill, as it then was, was being considered—was that there was a danger of too many yards being brought into existence. Despite the warnings by many hon. Members, the Government insisted on going ahead with the measure. They are now in the position where their own forecasts for production platforms likely to be ordered within the next year have been found to be excessive.

Mr. Skeet: During a period of high Scottish unemployment it is open to the Government to authorise the BNOC to order more production platforms. The mere fact that they have not done so, when they have the power, is an indication that they do not bother about the unemployment situation in Scotland.

Mr. Wilson: That question should be directed more towards the Government than towards me. However, according


to the estimates of the Offshore Supplies Office, between 55 and 80 platforms will be needed for the North Sea. The latest estimate, announced by the Vice-President of the United Kingdom Offshore Operators' Association, is that only another 20 may be required over the lifetime of the fields. Perhaps the Minister will comment on that.

Mr. John Smith: Perhaps the hon. Gentleman will have a word with his hon. Friend the Member for Argyll (Mr. MacCormick), who has not only strongly supported the development of the site at Portavadie, which is an important addition to our capacity to build concrete platforms, but was recently at my office asking the Government to spend more money on it. It is time that Members of the Scottish National Party started to speak with one voice instead of saying one thing in their constituencies, to attract constituency support, and another, officially, in the House of Commons.

Mr. Wilson: The Minister, who has avoided answering the question, should recognise that my hon. Friend the Member for Argyll (Mr. MacCormick), as long ago as July 1974, stated the policy for platform sites. He was worried about the effect on Ardyne when the Portavadie site commenced. A substantial amount of Government money has been put into that site. No orders have been forthcoming for that yard, but over the past few months a great deal of labour has been recruited, much of it drawn from the locality. That labour was hired on the basis of a Government promise that jobs would be available in the platform industry. These men will now be disappointed. That is why my hon. Friend the Member for Argyll was concerned.

Mr. John Smith: If the hon. Member for Argyll supported the development of the site only after a decision had been taken to develop it, that would be one thing. Can the hon. Gentleman explain why the hon. Member for Argyll gave evidence at the public inquiry into the planning application in support of the development of the site?

Mr. Wilson: It is perfectly true that my hon. Friend the Member for Argyll has to do the best he can for his constituency. However, it is also true that he is on record as supporting the policy

of a limited number of sites in Scotland. It is perfectly possible for him to take those two stances.
That does not disguise the weakness in the Government's policy. They deliberately set out to expand the number of sites on a gross miscalculation—almost a grotesque miscalculation—of the number of platforms that will be required. This is why we want the Minister's comments today. It is not enough for him to counter-attack by citing the views of another hon. Member. He is the Minister of State, with all the resources of the Government, so-called, at his disposal. Yet he has made a tremendous mistake on the policy for platform sites, despite the criticisms which other hon. Members made at the time when the Act was passed.
The second weakness in the Government's policy can be illustrated through the Oil Taxation Act. We criticised the Government for imposing far too low a rate of taxation on oil production. Anyone who has studied the matter since and seen the rate of return which, on given fields, can be obtained, knows full well that the Government were forced to cut back on their commitments to introduce an effective taxation policy. I want to quote some figures from an article published in the Petroleum Economist of December 1975. The figures are based on the Wood, Mackenzie estimates. For the Forties field there is a 32 per cent. discounted cash flow return and for the Argyll field a 57 per cent. discounted cash flow return. It is no wonder that the oil companies are trying to peddle the petroleum revenue tax system to Australia. The companies will be better off under it than if the Australians designed their own system.
The Government have not imposed a proper rate of tax on the industry, and will allow excessive profits to be incurred over the years. [Interruption.] It is all very well for the hon. Member for Bedford to "tut, tut" and splutter incoherently from a sitting position, but these arguments were advanced not only during the debates on the Oil Taxation Act but also during the Report stage.

Mr. Alexander Fletcher: In the extreme event of the Scottish National Party ever having any influence over North Sea oil or any part of North Sea oil, will it impose a much


harsher tax régime than the 70 per cent. that the present Government have imposed on the oil industry? In other words, is a 30 per cent. net return to the oil industry too much?

Mr. Wilson: The return that the oil companies will get under the existing system is too high. If the hon. Gentleman had been present during the Report stage of the Oil Taxation Act he would have heard me say that an appropriate rate for petroleum revenue tax would be 75 per cent. rather than 45 per cent.

Mr. Alexander Fletcher: How does the hon. Gentleman work that figure out?

Mr. Wilson: If the hon. Gentleman cares to study the Official Report of that debate he will find a perfectly adequate explanation of the calculations. I suggest that he does so for the benefit of his own education; but the fact is that we have a situation in which the Government's rate of return is lower than we had expected.
I turn to participation under the Petroleum and Submarine Pipe-lines Act. Today the Chancellor of the Duchy of Lancaster made it perfectly clear, in his, in effect, revolutionary statement, that that Act was not intended to be a revenue raising Act. In almost every other country, participation in oil is intended to have an incremental value in terms of revenue. Just how we can substantiate this policy of "no gain, no loss", which the Government are trying to negotiate in a labrythine manner, I do not know. We have received no proper explanation of what they hope to gain by buying oil at a given price and using it at that price. Where is the profit to be obtained, especially if they are competing with existing companies? It is up to the Government to produce some answers. It is the old story—they have an election manifesto commitment but once they come to power they simply try to present a façade. The same could be said of their devolution proposals.
I am inclined to agree with what the hon. Member for Dudley, West (Dr. Phipps) said about employment and the future pattern in the offshore industry. We have to take into account the great number of oil strikes which have been made over the past three or four years.

The North Sea oilfields, to give them a neutral title—they are better known under the name "Scottish oilfields"—have been extraordinarily prolific. An average of about one in seven has been successful, and in some areas the proportion has been much higher—as high as one in two. It is hardly surprising that a pattern should emerge in the industry whereby we start from wildcatting and exploration, move to delineation and, finally, to development. It is not unreasonable, bearing in mind the high costs of development, that where a number of oilfields have been proved, the companies would prefer to take development in series. A start would be made with one field building up the oil flow from that, and then using the resultant cash to fund successive investments. This is the pattern which I believe is likely to develop.
It was interesting that the Chairman of Texaco should refer, the other day, to the fact that his company was strongly considering going ahead with new investment. That is certainly one indication of how little weight should be attached to the argument that the Government's policies have held back development. We are, I believe, witnessing a natural process, but there are weaknesses in the Government's policies.
Let me deal first with the maximisation of oil contracts. True, the proportion has been rising, but it has been doing so very slowly over a period. It has been estimated that the Scottish share of contracts must be between 18 per cent. and 25 per cent. It is most distressing that the Government are unable to say what they consider the Scottish share to be. They will give only the British figure, and will not attempt in any way to estimate what share of the contract should go to Scotland.
There is also the question of the maintenance of employment in the oil industry. I hope that the Government will consider doing more than is provided for in their present scheme in the Memorandum for putting pressure on oil companies to place their orders in Scotland. I take up the point mentioned by the hon. Member for Dudley, West when he referred to production platforms and to sub-sea completions which are beginning to be introduced. In the next five, 10 or, perhaps 15 years these will undoubtedly displace


platforms as the method of developing new discoveries.
I am not satisfied that Scotland at present has sufficient access to the sub-sea completion industry, and I hope that it will be part of the Government's strategy to invite those with the necessary technology to come to Scotland to settle and to do their experimental work, much of which will be based upon the development of the North Sea oil industry.
I come now to the question of labour relations. Over the years we have seen an improvement in this respect, but only the other day industrial tribunals reported that they were unable to deal with cases brought by workers who claimed they had been dismissed unfairly. Jurisdiction difficulties prevent the tribunals from offering the same protections which are given to workers on shore.
There is also the question of employment on the supply boats which operate on the Scottish Continental Shelf. Here, there is room for some anxiety. The Government have no power to bring real pressure to bear on operators of supply boats and other vessels which work offshore—and I include semi-submersibles—to recruit Scottish or British seamen. I brought a case to the attention of the Secretary of State for Employment and I received in reply a curt letter saying that there were no powers to secure an increased share of that employment for local people.
The United States provides flag protection which ensures that American supply boats must recruit crews from within the United States. If a large and powerful country like the United States can impose such a system, I would hope that in these difficult days of recession and depression the British Government could take another look at their attitude.
Over the last few months, meetings have been taking place between the Secretary of State for Energy and representatives of the Japanese and Swedish Governments about the possibility of their national oil companies participating in operations on the United Kingdom Continental Shelf. Obviously those two countries are interested not only in having access to this very valuable commodity—they do not seem to think that its price will collapse all that quickly—but, more important, in security of supply. I hope

that the Government will consider a quid pro quo by which they would be allowed into the next round of licensing like any commercial company provided they were able to persuade companies in their countries to establish industrial investment in Scotland. That would certainly be appreciated by the people at home.
There is a real underlying weakness in the policies of both the Labour and Conservative Parties on oil. This weakness manifested itself during earlier exchanges with the Secretary of State and others about the Scottish dimension. If anyone here is unaware of the speed at which developments are taking place in Scotland in the move towards self-government, he should wake up and find out what is happening. Scotland could very well be self-governing by the 1980s, and it would, in those circumstances, have control over the offshore oil resources. It is therefore necessary for Scottish opinion to be heeded on these matters. Scottish Members of Parliament have been playing an active part and taking an active interest in the oil industry.
I extend my congratulations to the Minister of State on his promotion. I have had no chance to congratulate him personally. In view of the quick movement of Scotland towards self-government it would seem that he may be in danger of losing his seat, and therefore his new appointment—or, if he moves to England and obtains a seat there, he may retain his post but have no Scottish oil to deal with.

6.27 p.m.

Mr. Dennis Canavan: I have an interest to declare. As a member of the public I suppose I have some interest in BP, because that company has a majority public shareholding. I hope that the next time I have the opportunity of taking part in a debate on energy my interest as a member of the public will have expanded. I hope to see the growth of the British National Oil Corporation and I hope, too, that my right hon. Friend the Chancellor of the Duchy of Lancaster will have got round to completing his negotiations on participation.
I, too, was surprised that the Opposition chose this subject for a Supply debate today. Although the subject is their


choice, it has been obvious from their contributions so far they are almost completely devoid of any policy on oil. They may criticise our policies—not very constructively—but they have put forward no alternative suggestions. The right hon. Member for Wanstead and Woodford (Mr. Jenkin), their chief spokesman on energy, and a former Minister, was so bereft of ideas that by the end of his speech the Opposition Dispatch Box was beginning to look like a newsagent's kiosk. The right hon. Gentleman was reading out headlines from practically any old newspaper he could get his hands on. It was almost as though he or his party had no ideas of their own to put before the House. I hope that when the hon. Member for Ross and Cromarty (Mr. Gray) winds up tonight we shall hear more constructive suggestions from the Opposition.
The right hon. Member for Wanstead and Woodford got his statistics wrong. He mentioned a Government estimate of 40 rigs by this year, but the estimate mentioned by the Government was that there would be 30 rigs in operation. The actual figure is 28, two short of the original estimate, but that is not as bad as the right hon. Gentleman was trying to make out. If he cannot even count up to 30, Heaven knows how accurate were his estimates on the public sector borrowing requirement where he was dealing with billions of pounds.
The right hon. Gentleman gave a very depressing picture of the oil industry in general. He blamed the Government, conveniently forgetting that it was the Conservative Government who practically gave away exploration licences like Green Shield stamps. If the policy in the early days of North Sea oil exploration had been similar to our present one, the story might be different now.
The right hon. Gentleman also mentioned uncertainty about investment, employment prospects, and development in particular areas. He talked so much about uncertainty in the industry that that in itself was an argument for more public control and accountability of the industry rather than just letting it be subject to free market laissez-faire forces. It is the Government's job to control a new industry like the oil industry.
There is no point in anyone threatened with unemployment going to the Secretary of State for Employment or the Secretary of State for Energy with cap in hand, trying to keep his job or to get another job, unless the Government, through the Secretaries of State and Parliament, has some control over employment and industry. That is why at the centre of the Government's policy for this industry is good public participation and control.
Taxation is not enough. The Conservative Government's taxation was nonexistent, apart from corporation tax and the other usual company taxes. We have introduced the petroleum revenue tax, but we have not been complacent about it. We have said that it is not sufficient.
It is important to have participation with the oil companies because only through that type of participation can we get economic power. Participation will not give us any revenue-raising power but, according to the Chancellor of the Duchy of Lancaster this afternoon, in the longer term there will be real economic power in being present in the committees where decisions are made—not just about finance and economic development, but about other important things, such as the rate of extraction and the health and safety of the workers. Such participation will also give the British National Oil Corporation the ability to gain expertise in technology, and so on, and will also ensure a far greater say in the dispersal of the fruits of this new industry through development in deprived areas. Indeed, I go so far as to say that the Oil Corporation would be virtually impotent if it were not for participation.
I am sorry that the Chancellor of the Duchy of Lancaster is not present now. Earlier this afternoon in answer to my Question he said that so far only eight out of more than 20 companies involved in North Sea development have agreed in principle with 51 per cent. participation. He has not given any details so far of the participation negotiations. I have asked my right hon. Friend the same question several times. Last month he said that there were only seven companies and that the last two, Scottish Marine and Scottish Canadian, were involved in negotiations about a possible merger.
I ask the Minister to find out whether the eight companies which the Chancellor of the Duchy mentioned this afternoon include those two companies together or singly. I should also like to know the name of the new company. I asked the Chancellor of the Duchy of Lancaster about that matter this afternoon, but he must have forgotten, because he did not give the name of the latest company which has agreed in principle to participation.
No one, certainly not the right hon. Member for Wanstead and Woodford, has mentioned the Burmah situation. I hope that the Secretary of State is successful in his offer not just for a 51 per cent. share in the Burmah North Sea oil field, because I do not see why the Government cannot go for outright public ownership in a case like this.
Several hon. Members have referred to the importance of the development of this industry to Scotland. The whole of Scotland, with perhaps a few churlish exceptions, rejoice at the appointment of my hon. Friend the Member for Lanarkshire, North (Mr. Smith) as Minister of State, Department of Energy. I am sure that as a Scot, representing a Scotish constituency, he will ensure that Scotland's interests are looked after in the new oil developments. The Labour Government located the headquarters of the BNOC in Glasgow and the Offshore Oil Office and drilling technology centre are also based in Scotland. Although the headquarters of those organisations are in Scotland, that does not of itself ensure that there will be enough jobs created by this industry for the benefit of Scotish workers or workers elsewhere in the United Kingdom.
There is growing worry and anger not only in Scotland but elsewhere in Britain about rising unemployment. At present there are 1 ¼ million people unemployed in Britain and 128,000 of them in Scotland. Last night I addressed a meeting in Partick Burgh Hall in Glasgow which was full of incensed trade unionists. There was also a fairly broad representation of the parties. The fact that a member of the Scottish National Party shared the platform with me indicates haw serious the position was. It is not Often that I agree to share a platform with a member of the SNP.
The people of Scotland, Merseyside, teesside, Tyneside or anywhere else will not tolerate the present levels of unemployment. It is time that we took a tougher line with the oil companies and took them by the scruff of the neck and said "Place your contracts here and here, so that you provide jobs for the workers in areas which are particularly threatened with high levels of unemployment." [Interruption.] Opposition Members may laugh at unemployment, but an additional reason for the extension of public control is to defeat unemployment.
There are no major directly oil-related industries in my constituency, but many of my constituents work in Grangemouth which is in the constituency of my hon. Friend the Member for Sterling, Falkirk and Grangemouth (Mr. Ewing), who is Under-Secretary of State for Scotland. We were delighted that the first oil came ashore to Grangemouth last month from the Forties field. I was also delighted to hear the Minister of State tell me last week that at present all Forties oil is being refined at Grangemouth. Will my hon. Friend estimate how tong this will continue, what proportion of the oil from the Forties field will eventually be refined at Grangemouth, and what proportion will go elsewhere, whether or not it be in Scotland?
Moreover, the landing of the oil at Grangemouth was greatly welcomed and put into its proper perspective the Chauvinistic, verging on violent, remarks made by certain spokesmen of the Scottish National Party when the first North Sea oil came ashore a few months ago in the Thames Estuary. They were accusing the English of raping Scottish oil. That oil came from the Argyll field and, even by SNP calculations, it came from the English side of the median line which they are so fond of quoting. The Secretary of State, as a good Socialist Englishman, sent everyone who worked in the Committee on the Petroleum and Submarine Pipe-lines Bill, irrespective of his nationality, a share of the oil. We were all very grateful for his generosity.
The attitude of the SNP to oil and other resources is that, if they are discovered in one's own back garden, they are one's own property. The Secretary of State was right to say that it would be silly for any Government, Scottish or


English, to say that the benefits from oil should go exclusively to the Grampian Region rather than be shared with the Strathclyde Region. The hon. Member for Dundee, East (Mr. Wilson) was right to say that Scotland is not just a region. Scotland is a nation, of which I hope that hon. Members accept me as a member. But for nearly 270 years it has been in a special close partnership with other nations. It would be a pity if people with a destructive mentality tried to break up that partnership, in the same way as SNP Members tried in Committee to break up the BNOC into four little pieces, after the Government had set up its headquarters in Scotland.
I agree with the hon. Member for Bedford (Mr. Skeet) about the importance of an integrated energy policy, but the only way to achieve that is by public participation, if not public ownership, especially bearing in mind the public enterprise rôle of gas, electricity, coal, and nuclear energy. We could get a better integrated policy in the long term by sharing our resources with other countries in the United Kingdom. English gas accounts for 95 per cent. of the total gas in the United Kingdom, and 67 per cent. of Scotland's gas comes from the English section of the North Sea.
There is also vast mineral wealth in the Selby coalfield. If SNP Members were to attempt to smash up the National Coal Board in the same way as they want to treat the BNOC, they would not have the support of Scottish miners. Many coal seams in Scotland are difficult to work and it is far more expensive to extract coal from the average Scottish field than from coalfields in England and elsewhere. Scottish miners would not have confidence in SNP policies if they set up a separate coal board. Many miners feel that the advent of oil, particularly when the world price of oil is high, will mean that their jobs will be threatened in the medium term. In the long term, of course, the coal will be there long after the oil is finished. I hope that there will be a viable coal industry in Scotland.

Mr. Gordon Wilson: Is it the case, then, following the hon. Gentleman's argument about English coal as opposed to Scottish, that the policy of the NCB

under his Government will be to close down Scottish mines in favour of English ones?

Mr. Canavan: The Labour Government's policy on the future of Scottish coalfields is quite clear. We have invested more money in those fields. However, I doubt whether a Scottish coal board would be viable in itself. The miners also doubt that.
Oil is not a panacea. It will be of great value to all the people in the United Kingdom, particularly in under-privileged and deprived areas: but it is mainly through the BNOC, through participation and the policies of the Labour Government that we shall be able to ensure that its benefits are not reserved for a few multinational companies but are dispersed throughout the United Kingdom.

6.47 p.m.

Mr. Peter Hordern: I should start by declaring an interest, as a director of an oil company. I cannot follow the arguments of the hon. Member for West Stirlingshire (Mr. Canavan) very closely—partly, I fear, because of my bad understanding of the Scottish language, to which I have been exposed a good deal in the last hour or so. But I shall follow what he said about participation, and one or two other matters.
I agree with the hon. Gentleman that the prospects held out of North Sea oil for this country are very rewarding. I think that we are all looking forward to the period from 1980, when the revenues from PRT and other taxes will be very beneficial. Unhappily, however, there is also a feeling that during the interim there is not much to worry about—that some preparation can be done but that the money will still flow, and the benefits will accrue from 1980. The period with which I am concerned is the next two years or so, when the financing of the oilfields has to be undertaken, at great expense.
At the recent energy summit, the Prime Minister talked about Britain as a future member of OPEC. I believe that it was the German Chancellor who told him that he heard much more rattling of the begging bowl than banging of the oil drum from the Prime Minister. I believe this to be the case. By any computation, our expenditure in the North Sea will be very


large. Estimates can vary a good deal, but it is not far out to suggest that by 1980 the capital expenditure could amount to £ 8 billion. Assuming present interest rates and a 10 per cent. depreciation rate, the total amount each year from now could be about £ 1 ½ billion.
It is true, on the other side of the balance sheet, that the Government will get a good deal of revenue. I believe that the Department of Energy claims 70 per cent. as the total take by means of royalties, PRT and corporation tax. But little of that revenue will arise before 1978 or 1979. So it is with the next two or three years, during the heaviest period of capital expenditure, that we should be most concerned.
It is in this respect that one must ask what is the relevance of BNOC and the Government's proposals for 51 per cent. participation. I understand that the purpose of the Corporation is to form the logical result of participation and nationalisation. Will the Minister of State tell us what, exactly, the Corporation will be doing? One of the points made by the Labour Party is that it will be capable of a good deal of refining—that it will have refining capacity, throughput operations, and so on. The hon. Gentleman must be aware that there is a glut of refining capacity, which is likely to persist for many years. If the Government want refining capacity, there is no need to build it. Plenty of it is available now to the Government if they want it. I believe that the Government have been offered refining capacity. Whether they will buy it, I do not know. There is no point in creating any more, but that, apparently, is one of the purposes of forming the Corporation.
The Government already have effective control of 20 per cent. of our North Sea oil through the holdings of the British Gas Corporation and the National Coal Board, the two together amounting to about 20 per cent. It is not as though the Government really need to obtain a great deal more participation in order to give something to the Corporation to do. They do not need any refining capacity, or a rôle competent to give extra production.
What could be added to the 20 per cent. is 12 ½ per cent. royalty payments, which could be taken as oil payments

rather than cash payments. If one adds royalty payments to the 20 per cent., it amounts already to a significant part of the North Sea oil interests—about 32½ per cent. Therefore, what does 51 per cent. participation amount to? What, in particular, does the formula "no gain and no loss" really mean? What is it supposed to do? If no financial gain is to operate behind it, what is the purpose of 51 per cent. participation? I did not hear the hon. Member for West Stirlingshire refer to this, but I understood that the idea of a 51 per cent. participation, or of any nationalisation, was to garner the fruits of future exploitation.

Mr. Canavan: Perhaps the hon. Gentleman did not understand my Scottish accent when I tried to explain that participation would give the Corporation the power to be involved in the decision-making, including decision-making with regard to economic consequences.

Mr. Hordern: I am grateful to the hon. Gentleman for speaking so slowly so that I could understand, but he has made the position much worse. It is bad enough already to find a good reason for the existence of the Corporation; if he now says that it is to take control of economics, and so on, that is a very much worse reason.
I am anxious to press the Minister of State for an explanation of the purpose of participation. How is it to work? Let us assume that the Government approach the oil companies and say, "In respect of future capital development we would like to provide 51 per cent. of the money that might be required." That might be a way—I suspect that it will be—to go about it. I was in the United States in September, and I talked to the representatives of several large American oil companies. I understood from one of them that that was the very formula which was being put to them. I regret that one of the largest apparently told the Government negotiators, "We understand that the Government would like to lend us money and will give us 51 per cent. of any future requirements, but we can borrow money more cheaply elsewhere." I understand that that is indeed so. It is no wonder that these companies do not find the offered terms very attractive.
If that is all it comes to, the Government are saying that 51 per cent. participation means that they are going to lend the oil companies money from their own borrowing requirements, and that the companies will have to dip into their own coffers or use their own borrowing powers to develop their North Sea interests. Is that the basis of the negotiations now being carried through with the oil companies?
I hope that the Minister of State will be able to reply to this point, because someone must know. The Chancellor of the Duchy of Lancaster has said that there are to be no gains and no losses—no extra penny of revenue arising from the operation. What is the point of it, therefore? Again, who is negotiating with the companies? Is it the Chancellor of the Duchy of Lancaster, or is it the Secretary of State for Energy? I do not know what the Secretary of State is going to say when he goes on his postponed visit to the United States.

Mr. Rost: If he is allowed to go.

Mr. Hordern: Yes, if he is allowed to go. I am sure that the Americans, with their usual great courtesy, will be delighted to hear him. I am sure that he will draw record crowds. But I hope that he will stick to what the Chancellor of the Duchy of Lancaster has said. It is under the Chancellor that the present negotiations are proceeding. But what is going on?

Mr. Ronald Atkins: I am interested in the hon. Gentleman's point about the raising of capital for development of oilfields in the North Sea. Do I understand from what he has said that the bulk of the capital raised will come out of the resources of the oil companies, and will not be raised in the market?

Mr. Hordern: I do not think that the hon. Gentleman understands the process. In the normal course, the oil companies would be operating largely on the market, but I understand the Government's proposition to be that they need not borrow in the market, largely because the Government will be raising money that they will then lend them, getting in return the commercial yield normally provided by the companies. In other words,

the basis for negotiation is that the oil companies themselves will be given market rate loans by the Government, and therefore they will not themselves have to borrow. That seems an extraordinary way of going about the negotiations. If that is not the proposition, the Minister of State should tell us exactly what the basis is, because everybody would be interested to know.
Whether that is the basis on which the Government intend to negotiate with the oil companies—we understand that these are voluntary negotiations, so the oil companies do not have to accept—the Government will have to borrow vastly more money than has so far been generally recognised or stated by them. Let us suppose that the total amount of capital expenditure is £1½ billion a year, which I believe it will be in the next two or three years. The Government's share would be £750 million a year. It is well known that BP will need to raise a good deal of money in the next year or two to finance the Alaskan operation and the North Sea section, and that Burmah will need to finance its own expenditure in the Thistle and Ninian fields, which will require a good deal of money, quite apart from the money that the Government may pay out as compensation for one or both these fields, as the case may be.
It would not be far wrong to say that the Government will need to borrow £1,000 million a year for the next two or three years on the oil account alone. That has not entered into any computation. Nor has it been included in the borrowing requirement. It was not included in the last White Paper on public expenditure for the next five years, and it is doubtful whether it will be included in the next, much delayed, five-year public expenditure White Paper, which we were promised by Christmas but which we may now get by the middle of January. It will be interesting to see whether this additional borrowing requirement will be included in that White Paper when it is finally published.
Where is the money to come from? It is generally supposed that already this year the Government need to raise £12 billion, and now, according to all the evidence one can find, it seems certain that they will have to raise at least another £1 billion a year on top of that


to finance their North Sea oil developments.
I understand that, by coincidence, the winter Supplementary Estimates were produced this afternoon, and they show that Government expenditure has so far this year increased by about 44 per cent., and that it is expected to increase by about 45 per cent. for the year as a whole, and this at a time when revenue has risen by just under 30 per cent. That is a very large gap, and it is a measure of a problem which the Government face. They must finance an enormus amount of money already, yet they are adding to the burden through their North Sea oil commitments, and all because, so far as one can observe, in their election manifesto they made this absurd commitment to 51 per cent. participation.
This 51 per cent. participation has not made, and does not make, any revenue sense. The Minister of State knows it, his Department knows it, and other Ministers know it. Perhaps only the hon. Member for West Stirlingshire, whose speech I did not follow as closely as I should have wished, does not know. The truth is that only the left wing of the Labour Party does not understand. Hon. Members on the Left do not realise that they will have no benefit whatever out of this 51 per cent. participation, and all they are likely to do is to find themselves trying to finance an impossible objective during the next two years with a borrowing requirement certainly of £12 billion and probably of £13 billion.
Again, I ask where the money will come from. The position is already serious. It is already recognised that the country will have a large balance of payments deficit to finance this year. No one suggests that that deficit will be any better next year—the estimates range from £1·6 billion to £1·8 billion—and all this money must be borrowed in the markets of the world, from overseas lenders.
Overseas lenders are becoming a little more difficult about lending money to the British Government. We were told only a fortnight ago that we were to draw upon our oil facility and borrow £800 million, I think—this was an automatic device—and then borrow on our general account with the International Monetary Fund. If the newspapers are to be believed—I think there is some sub-

stance in what is said—the Americans are getting more and more concerned about lending us money, because they think that we intend to impose import controls, and they will not let us have import controls and immediate recourse to the IMF. In fact, any suggestion of extra expenditure will entail stricter conditions imposed upon us by the International Monetary Fund.
The Government will not be able to borrow this money for developing the North Sea without the most stringent conditions put upon us in all sorts of other ways by the International Monetary Fund. The Fund's inspectors are already coming to look over the books. They will be here every three months, just as they were in 1968 and afterwards. We shall be right back at the old game. It is nonsense to suppose that the International Monetary Fund is interested in financing a "phoney" operation such as this 51 per cent. participation.
Only one section of the British people is concerned about 51 per cent. participation, or even believes that it can be a reality, and that is the left wing of the Labour Party. I am sorry to have to tell hon. Members on the Left that, as in so many other matters, they are in for a grievous disappointment.

7.3 p.m.

Mr. Joseph Dean: I have heard nothing yet in this debate on oil policy, chosen by the Opposition, which has been any different from what we heard during the debates on the Petroleum and Submarine Pipe-lines Bill. The Opposition have trundled out the same old arguments. When we were debating the Bill, I said that the difference was one of philosophy between the two parties, in that the major Opposition party believed that this new-found source of wealth was better left to exploitation by the private sector and that the benefits for the community should be garnered by a tax system. I emphasised at that time that my philosophy and that of my party—I make no apology for repeating it—was quite the opposite, that the energy crisis in the winter of 1973, which put the country on a three-day working week, had proved that this new-found source of wealth was of such fundamental importance to the nation's economic future that we could not allow it to go into private


ownership and just depend on fiscal regulations to recoup our share of the cake which had been found in the sea off our coasts.
Nothing reinforced my judgment that that view was right more than what was said in a book published a few months ago, indicating that the Prime Minister at that time, the right hon. Member for Sidcup (Mr. Heath), had during those trying days sent for the four chairmen of the leading oil companies with which we were dealing, including British Petroleum in which, I believe, we had almost a 50 per cent. holding, and asked for special consideration for the United Kingdom because of our association with those companies. It was made clear to the right hon. Gentleman that there was nothing doing, that, despite all those long associations and the fact that some of the companies had had over-generous agreements given to them when they took up their licences, the United Kingdom was in no special position but was just another customer in the queue.
I could not illustrate my point more dramatically. If that was the system, I could not see, and I still cannot see, those same people behaving any better towards this country now that we have this newfound wealth in the North Sea.
Before I continue my argument, I must congratulate my hon. Friend the Member for Lanarkshire, North (Mr. Smith) on his appointment as Minister of State. Having spent quite a long time with him in Committee during the passage of the Petroleum and Submarine Pipe-lines Bill, I have no doubt that it is a very good appointment, and I know that the policy pursued by the Labour Party and our Government, as well as the interests of the country as a whole in its energy resources, will be admirably served by my hon. Friend.
This debate is not about devolution, but only about two hon. Members so far have not referred to it. The right hon. Member for Orkney and Shetland (Mr. Grimond) touched on the subject, and I think that he used the term "Assembly". At Question Time today my right hon. Friend the Chancellor of the Duchy of Lancaster touched on the subject of a Scottish Parliament, then quickly with-

drew the term and said "Whatever name you give it".
I remind the House that all that Parliament has before it at present is a White Paper, and it is not the surest of things that there will be a Scottish Assembly or a Scottish Parliament. That may be the decision which this Chamber takes at the end of the day, but it is far from being a reality, and some of the tactics being adopted by certain hon. Members in an attempt to compel such a course are very dangerous.
One of the saddest features of the present scene is that the Scottish National Party in its approach to oil and to anything else has adopted a divisive policy, saying that nothing is right save what it says, while in the end saying nothing. Hon. Members speaking for the SNP criticise the Government's policy, they attack the major Opposition party, whose Supply Day this is, for producing little or no counter-policy, but at the same time they produce no policy themselves save the slogan "Scottish oil", which would be debatable in any court of law wherever it was sought to draw the line.
There is no sense of reality in that. Indeed, a good many people take the serious view that all that the SNP has succeeded in establishing in regard to North Sea oil is a sort of mythical squatter's right which will never prove to be a reality, anyway.
The right hon. Member for Orkney and Shetland said that a Scottish Assembly should have some control over revenue from North Sea oil. How does one quantify "some control"? If we have a national oil company, which little bit do we hive off?
I am a third-generation immigrant Scot living in Lancashire and representing a Yorkshire seat. Am I entitled to say "Let us have extra for Yorkshire out of the new-found coalfield at Selby, which will long outlive any oil found in the North Sea"? How daft can one get?

Mrs. Bain: I am sure that the hon. Gentleman was hoping that someone on the SNP Bench would tackle him on this issue. Does he accept the United Nations Charter, which gives small nations the right to self-determination? If he rejects it, does he believe that the House is


right to reject the democratically expressed wishes of the people of Scotland that the benefits of national resources should go to the community concerned? Does he believe it right that the people who suffer most in the development of those resources should gain most from that development?

Mr. Dean: The hon. Lady had the most emphatic answer to the question whether Scotland wanted separatism and the right to self-determination when the people of Scotland voted by two to one to remain in Europe. I did not favour our remaining in Europe, but Scotland voted overwhelmingly for it. That argument must be left where it is.
My party's policy is to have a majority public share in the wonderful area of wealth that has been found, so that it can be used for the benefit of the economy as a whole, which includes Scotland. It saddens me when SNP Members parade Scottish poverty as though Scotland had been badly treated by Westminster Governments and had not had a fair share of the cake. The trouble in Scotland is the same as it is in England, Wales and most other countries where the Governments do not control capital. No one will convince me that a Scottish Assembly would control capital in Scotland. Such an Assembly would have the worst possible effect. It would have no control, because it would be a large-sized parish-pump council, and nothing more.
One of the worst aspects of the SNP's divisive approach was seen when the hon. Member for Clackmannan and East Stirlingshire (Mr. Reid) asked a supplementary question a fortnight ago, when the difficulties of the Chrysler situation were manifesting themselves. He said, in effect, that the Government must not take a decision that would sacrifice Linwood for the workers of Coventry. That is a two-way argument. Voices south of the border say "No". Nothing could be more of a disservice to working-class people, whether in Scotland, England or Wales, than that approach. Late this afternoon I met shop stewards from Linwood and from Coventry, and I found that it is not their approach. If Coventry is closed, it will mean that in the end Linwood will be closed, and vice versa. The nationalist approach is the worst possible. When some people shout "Not us in favour

of the English", others start to shout "Not us in favour of the Scots".
I hope that the resources from oil will be used to help the regions. Members of the SNP say that Scotland has been under-privileged. I have figures showing that for every pound per capita spent in England on industrial or redevelopment grants £5-plus is spent in Scotland and £6-plus in Wales. That is not bad treatment.
The rate support grant is one of the biggest bones of contention. Under the domestic elements of relief, the Scottish ratepayer receives 52 per cent. more than his English counterpart, and the Welsh ratepayer receives 66 per cent. more than the English.
If the Scottish National Party wants to fight a political battle, I wish that it would do it on a different philosophy, and not argue that Scotland has always done badly out of central Government. Whether under Labour or the Conservatives, there has been a shift towards grants for the right areas, for wherever there is under-privilege, unemployment and threatened redundancy. I support that policy. I wish that members of the SNP would open their eyes to what has been going on, and admit it.
The problems have nothing to do with the question of government. They are to do with capital and where it lies. Trade unionists the world over are trying to find a way to stop the multinational companies from misbehaving. If SNP policy ever comes to fruition the party will have a voice in no forum.
Let us knock for six the idea that the Scottish regions have been badly dealt with. There are still areas of deprivation in Scotland, but there are still some very bad areas of deprivation in England. I hope that when we debate devolution we can see the end of devolution once and for all and get round to getting the economy of the country right. Whether or not we have devolution, unless we put the economy right there will be poverty in every region.
One hon. Member touched on the question of safety for divers. Since we last debated the subject there have been more tragic deaths. Those of us who have seen the programmes on television highlighting the terrible risk taken by the divers ask that all necessary steps, no matter how expensive, be taken by my


right hon. Friend the Secretary of State—know that I am pushing on an open door—to give divers the maximum safety so richly deserved for such a terrible and dangerous job.

7.18 p.m.

Mr. John Hannam: The hon. Member for Leeds, West (Mr. Dean) spoke at length about the devolutionary aspects of the oil industry. I shall not go down that cul de sac.
After several previous debates on various aspects of oil legislation, in this debate we are trying to broaden the argument. We keep asking the Secretary of State and the Government relevant questions about the state of the oil industry, but we have to look into a kind of crystal ball. Having committed themselves to State intervention in the industry on a massive scale, the Government have to keep on saying that all is well and that everything is going according to plan. The trouble is that because we do not receive details of exactly what is happening in the industry we cannot judge the results. In a debate such as this we can try to compare the present state of the industry with what it would have been if the Government had not started on their path towards State control.
As they see the failure of their policies developing, Ministers try to bluster their way through and to attack any critics who question what is happening to the industry, on the dubious ground that those critics are being anti-British. That argument must be exploded, because it is the role of everyone who is worried about the future of our economy to inquire about the exact state of any industry. Labour Members are doing that when they examine the motor car industry. A Government who are pursuing what we consider to be outdated and doctrinaire party political policies which are damaging our national assets, or potential assets, could be considered to be anti-British. That argument can be turned in both directions. The results of the recent approach to the EEC for a seat at the oil conference are an indication of what damage can be done to this country by a Government and their policies.
It was easy, in the "post-OPEC" price spiral situation, to slide through such

catch phrases as "It is Britain's oil and the British people should have the benefits of it". A confused and frightened energy-consuming nation could not be expected to challenge the charade of Labour's proposals for 51 per cent. participation and the subsequent creation of a totally unnecessary British National Oil Corporation.
Throughout last year we battled out in Committee and on the Floor of the House the various pieces of legislation dealing with the oil petroleum tax and the nationalisation proposals. Those Bills were ill-thought-out and damaging to our nation's future. The Bill dealing with the petroleum tax was amended to such an extent that it is now considered to be acceptable to the oil industry. In those debates we forecast the ill-effects that would follow. But we were attacked as being the spokesmen for the oil industry. The description of this attitude was summed up by my right hon. Friend the Member for Wanstead and Woodford (Mr. Jenkin)—namely, that what was bad for the oil companies is good for the country. One recalls the comment made by the Secretary of State for Employment during the miners' strike that what was good for the miners was good for the country.
What we were doing, as a responsible Opposition, was to put forward what we considered to be the right proposals for taxation and depletion regimes, with regulatory controls, so that the nation would benefit from maximum taxation and royalty revenue, while at the same time being able to control, if necessary, the programme of exploration and depletion to ensure as long a period of benefit for the country as possible. Whether that would mean a slowing up of depletion or a speeding up would in future depend on the price structure of oil in the years ahead. If demand for oil continued to decline, and if at the same time discoveries of oil resources in the world increased, oil prices could drop dramatically in a few years' time. It might pay, as my hon. Friend the Member for Bedford (Mr. Skeet) emphasised, to go for a greater maximum depletion policy. But if oil demand gradually picks up, although prices could in real terms decline a little the medium-term value of our North Sea oil will remain high and a


planned depletion programme will be called for.
However, that is all in the future. If we had the right structure, these patterns of oil pricing and developments could be adjusted to by a regulatory authority. But what we have instead, as a result of a minority vote cast by this country for this Left-wing Government, is a set of policies which, as this debate highlights, is turning our great North Sea oil bonanza into what one newspaper called a potential "North Sea Bubble".
This highly technological, vastly expensive industry has got itself into a bureaucratic muddle, with the bull-necked BNOC wallowing in the same water. The only excuse given by the Secretary of State for Energy, other than to use the stale phrase "It is in our manifesto", is that most other countries have done it and therefore we must follow suit.
However, when I asked the right hon. Gentleman, in our last debate on this topic, which Western industrialised nations—other than Norway, which is a small fishing and agricultural country, with only 4 million people—have imposed majority participation upon their oil industries, I failed to get an answer. However, I hope that that question can be answered tonight. It is a most relevant question, in present circumstances.
It has been argued again and again that—I quote the words of a well-known "North Sea study group"—
Nationalisation would therefore be likely to delay the exploitation of the new wealth of energy which lies under the North Sea.
That prediction came not from the oil companies or from the Conservative policy group but from the Labour Party's North Sea study group in 1967. That was before the massive increase in costs that has now rendered all but a few of the North Sea oilfields marginal.
If the Labour Party had not sold the pass to its left wing, and if its proposals had taken into account these changing circumstances, embracing increasing costs, I am sure that its policy would have been much closer to ours and would have involved new tax and royalty arrangements and a regulatory body to control depletion and a scheme for financing marginal fields, if that were deemed necessary in the national interest.
That scheme of finance might have involved a Government stake in the consortia concerned during the period involving a loan, possibly on an ICFC basis. That arrangement would have been generally accepted by industry on both sides. But, instead, we have this great landed whale of BNOC, stranded on the beach, with a total lack of enthusiasm on the part of anybody to help drag it into deeper water.
Our economy, in its stricken state, is becoming dangerously mortgaged on the security of our North Sea oil. Therefore, every day lost in landing oil places a grave burden on the British economy. Between 1970 and 1974 our oil development progressed as rapidly as anywhere else. The number of explorations wells drilled in British waters rose from 22 in 1970 to 65 in 1974. But the cost of these developments is frighteningly high. One latest estimate for a major oilfield in the difficult areas of the North Sea is that the capital investment needed is of the order of £3,500 per barrel per day of peak productive capacity-25 times the cost of Middle Eastern oilfields. The Shell-Esso Brent field system will require capital expenditure of about £1¾ thousand million—almost £500 million more than the entire Royal Dutch Shell Group's net income for 1974.
No wonder that Shell launched a major attack on the Government's North Sea oil participation plans last week. The company's managing director disclosed that the company had lost money on its United Kingdom operations last month, and he said that he felt, if I may quote his own words,
less than enthusiastic about participation and the prospect of an inexperienced British National Oil Corporation attempting to match the North Sea efforts of dozens of oil companies".
He regarded that prospect as "awesome to contemplate". He continued:
Participation will not benefit Britain in any tangible way. It must therefore be regarded as a political public relations exercise.
This irrelevant and expensive manifesto commitment is killing the confidence of the oil investors, and also killing the supply of investment finance. I could produce an equal number of newspaper cuttings from investment journals highlighting the lack of finance coming forward to the industry, but it is the lack


of knowledge of the Government's activities that is causing so much concern. Activity on new fields appears to be zero; rig building is at a standstill; investment also is at a standstill; and BNOC seems to be a "one-man-and-his-dog" operation.
The recently retired Minister of State proudly announced, a week ago in the other place, that another fish was on the hook—in other words, that another oil company had agreed to participation. But on what terms? The secrecy insisted upon by the Government for these negotiations allows the Secretary of State to imply, smoothly and plausibly, again and again, that all is going well and that the companies are quite happy with the progress being made in negotiations. I just do not believe that to be true. Every indication that one can get from those involved is to the effect that they are not happy with the way in which the negotiations are being carried out. They feel that the Government are using their unfair bargaining strength over loans, farm-outs and future licence allocations to obtain a less than "no-gain, no-loss" agreement with those companies. We should have the answers to some of those questions, to enable us to judge accurately the true state of affairs in the North Sea.
1 wish to put some questions to the Secretary of State. When can we expect self-sufficiency in the North Sea? The projected date has been given as 1980, but one now hears talk of 1982 and 1983.
Secondly, how many industrialised countries, other than Norway, insist on majority participation?
Thirdly, is it true that the interest repayments on the Government's borrowing will be double the revenue that we can expect from the North Sea?
Fourthly, how many production platforms are being ordered for next year? However the Government try to gloss over the seriousness of the fall-back in oil activity, it is becoming apparent to us all that the policies of the Government will cost the British taxpayer thousands of millions of pounds. They will slow up the vital developments in the North Sea and force many of the oil experts engaged in our North Sea activities to move to other parts of the world,

where the political and tax climate, as well as the weather conditions, are more favourable.
Obsession with State intervention is a disease in many areas of British industry, but no more so than in this highly complex oil industry, on which our whole economic future depends.

7.31 p.m.

Mr. Ronald Atkins: I would not have intervened in this debate but for the accusation that has been directed against the Government Benches, of the so-called doctrinaire attitude of the speakers. In fact, it was the doctrinaire attitude of the hon. Member for Bedford (Mr. Skeet) that induced me to try to catch your eye, Mr. Deputy Speaker.
The hon. Gentleman compared the nationalised corporations with the Government participation in British North Seal oil. Starting, as do so many Opposition speakers, by directing criticism against the nationalised industries and services, he referred, first, to railway losses and the losses of other nationalised industries—those very losses that followed the last Conservative Government's action in holding prices when the costs of the nationalised industries rose. Of course, successive Governments have had a hand in this kind of policy, but at least the consumers benefit from that action. Therefore, I do not complain too much even at what the last Conservative Government did, except that the Labour Government have to pay the price of that policy. It is particularly annoying when the Opposition, who have caused the increase, complain about the Government's raising prices and, at the same time, about the losses sustained by the nationalised industries.
I believe, in any case, that the position of North Sea oil is different. If the Government abandon their claim for fair shares, the British consumer and taxpayer will lose. It is because the British Tories are so doctrinaire at all times that they knock public industries and services as their favourite Aunt Sallys.
This kind of situation is unknown in Europe. It is possible to conduct a debate in European countries without knocking the nationalised services and industries, of which there are very many in Europe. It is for this reason that in


many cases the publicly-owned services and industries are in a weak position in this country, as compared with the situation in Europe. It is sad, therefore, that the Opposition should retain their prejudices while they consider oil taxation and revenue—revenue which is so vital to the British economy. They would deprive the British consumer and taxpayer of a great bonus. They would turn their backs on Britishers, and make compatriots of American big business.
The British Government are acting in much the same way as other Governments who are newly developing their oil resources. It is notable that the Opposition complain that it is a Left-Wing Government who are doing this. But if we look to the Middle East we find Governments far from Left Wing who, in their national interest, are trying to get what they can out of their national resources.
Another speaker said that Britain was the only country in the West, apart from Norway, which was trying to get a fair share for its nationals. We should not ignore the fact that Norway is in precisely the same position as Britain. No other Western countries in Europe are in a comparable position. Looking further west, to America, there is a very different situation. Oil was developed there about 100 years ago, and there was the old laissez-faire system when the scale of operation was much smaller. Consider Venezuela as a Western country. Venezuela is in the hands of the oil companies. We do not want that to happen to Britain. Even ignoring the question of patriotism, it would be sensible to get as much for Britishers as possible in our negotiations with the oil companies.
It has been said that we are too generous to the oil companies. The Leader of the Scottish National Party insisted that we should get more. I agree with his suggestion that more orders should be placed in Scotland for the construction of oil-drilling equipment, and so forth. I wish that he had said that more orders should be placed in the United Kingdom for making that equipment. But is it the responsibility of the Government? Perhaps the Government should have done more about this, but is it entirely their responsibility? The hon. Member for Bedford cannot say that the companies concerned are nationalised. Where

is the private enterprise—indeed, any enterprise, if it comes to that? These companies have been letting the country down. They have had great opportunities—opportunities for which private industry often asks—and they have not made the most of them.
The Scottish National Party also demands that oil revenues should be used entirely for Scotland. I would not object to that idea if it meant that the grants and assistance now going from England for the maintenance of Scotland and the services there were withdrawn, and if these oil revenues were spread over a longer period than the life of the oilfields—longer than 30 years—so that when the oil revenues came to an end Scotland would have something to live on.

Mrs. Bain: Does the hon. Gentleman accept that the importance of oil and its revenues lies not in the short-term but in the long-term benefits which come from sensible investment in the economy to provide employment in the future?

Mr. Atkins: I think there is too much euphoria about the permanent benefits of oil. In the long run it will depend upon the ability of any nation to use its various resources, and not oil alone. The Scottish National Party will do a great disservice to the country if it gives the impression that oil resources will automatically give this country, or even just Scotland, prosperity. It is not true.

Mr. Gwilym Roberts: Does my hon. Friend not agree that even if one were to accept this absurd racialist argument, if the Scottish border were extended, the great bulk of the oil would be in English seas, or to the north of Scotland?

Mr. Atkins: I agree. If a Scottish Parliament is to be based on oil revenues derived from the North Sea, Scottish independence will be the shortest-lived proposal of any Parliament in history, because once the oil revenues were spent Scotland would be penniless. It would be foolish to base any independence or separatism on that. It is unfortunate that the SNP should use newly-discovered oil resources as a reason for separatism. If it were to succeed, Scottish independence would be of very short duration.
I am sure that the Scottish people will see through the racial bigotry and avarice


sometimes expressed by Members of the SNP, because I am convinced that bigotry and avarice form no part of the Scottish character. I think that the Scottish people will see through the tactics of the SNP before long.
The hon. Member for Horsham and Crawley (Mr. Hordern) spoke about the difficulties of the Government in raising capital for oil development in the North Sea, and he estimated that there would be a Government borrowing requirement of £1,000 million every year. Although I questioned him, I was unable to discover why he thinks it more difficult for the Government than for the oil companies to raise the money, because if the Government do not raise the money the oil companies will have to raise it, and in the same market. The difference is that if the Government raise the money they will reap the profit from it. Otherwise, it will go entirely to the oil companies, most of them foreign.
The hon. Gentleman questioned the creditworthiness of the Government, but I am sure that it is no weaker than that of the oil companies. Certainly it is no weaker than that of the Burmah Oil Company, which has asked the Government to bail it out. It seems that any private company that fails turns, in the last resort, to the Government. Companies come cap in hand to the Government when they need help, but at other times their leaders criticise the Government, saying that they have no power or creditworthiness. A large stake in the oilfields of the North Sea will strengthen the Government's creditworthiness and will be security for any future loans we raise.
The hon. Member for Exeter (Mr. Hannam) spoke about the minority vote for the Labour Government. He seems to have overlooked that what we are talking about is policy, and not the last General Election, and the Government's oil policy certainly represents the majority view in the country. I am utterly convinced that the great majority of the British electors support the Government's oil policy. That is the chief reason why the Opposition are afraid to produce an alternative policy. In the interests of the economy about which the Opposition pretend to be so concerned, it is a pity that they do not forget party doctrine

and support the Government in a policy which is obviously in the interests of the nation.

7.45 p.m.

Mr. Peter Rost: I do not propose to deal at length with the rather pathetic, doctrinaire and unconvincing attempt of the hon. Member for Preston, North (Mr. Atkins) to defend further nationalisation. His argument appeared to be a justification for extending nationalisation because existing nationalisation was such a success and was so popular. If he really believes that—there cannot be many hon. Members opposite who still believe it—he must be even more out of touch than the public believe Members of Parliament to be. No doubt he will put that to the test with his electors in due course and perhaps will get a result which astounds him.
I wish to discuss the realities of the situation rather than deal with arguments for or against doctrinaire nationalisation. We have heard some persuasive arguments from this side of the House in attacking the Government's policy which is causing crippling delay, uncertainty, and a lack of confidence in the development of the North Sea resources. The Government should be censored, not simply for the uncertainty, delay and lack of confidence, but, above all, for the evidence that they are displaying of a complete lack of priorities.
At a time when the Government are having, at long last, to face the realities of trying to make the country live within its means; at a time when the nation is faced with bankruptcy; at a time when the Government are, at long last, attempting to control inflation and stem the unemployment which their failure to control inflation is creating; at a time when they are being forced to face the errors of their two years of gross mismanagement and overspending of taxpayers' money; and at a time when the Cabinet is in almost daily emergency session scratching round for ways to borrow more money from abroad, or to cut some of the wasteful spending which their policies have promoted, the Government continue to pursue a policy which will give a new nationalised industry an initial dollop of at least £900 million, plus an annual income of about £1,000 million from royalties which will be siphoned from the


Treasury, plus relief from petroleum revenue tax which the rest of the oil industry will have to pay. They have promised that the benefits of North Sea oil will accrue to the people. Their policies will result in exactly the opposite.
The Government are scraping round for more money from the International Monetary Fund. Their intention in borrowing this money is, not to balance the nation's housekeeping and put our affairs in order, but to continue over-spending, to allow us to live beyond our means, and to finance completely unnecessary and damaging doctrinaire Socialist nationalisation. That is why we are being invited to borrow more money from abroad.
The Prime Minister is at such a loss to suggest policies to save the country that he continually asks the Opposition for help and advice: and we are continually telling him what he should do. We have told him time and again, every day for months, what he should do if he wants to save the nation from bankruptcy. However, he does not listen, because it does not suit the Labour left wing to accept the advice which we have offered him and which he knows is the only answer.
We shall tell the Prime Minister again. He should sort out the priorities for the nation. It is a matter, not just of cutting overspending, but of stopping policies which will increase spending still further. That is why the proposals for the North Sea are such a disastrous contribution to the irrelevance of Government policy.
The Government continue to pursue policies which will greatly increase spending at a time when spending elsewhere is having to be cut, when the National Health Service is a battleground, when teachers are unemployed and education is suffering, when defence expenditure is being cut to the bone, when the social services and welfare are being starved of finance, and when the whole nation is being asked to make sacrifices. One might be able to justify this spending if it achieved something, but it does not. It will make matters worse.
The first question we must ask about the Government's priorities is whether they have the money to spend on the BNOC and 51 per cent. nationalisation. If they have the money or can raise it, why in every other sector are cuts being made which will create severe hardship to the nation and increase unemploy-

ment? If the Government have the money or can raise it, why cannot it be spent in areas of the economy where it will be cost-effective and contribute towards solving our problems rather than aggravating them?
We are about to get the Government's White Paper on public expenditure up to 1980. What allocation will be made for financing 51 per cent. nationalisation and the BNOC? We have heard today of supplementary estimates for Government expenditure in the period from the Budget to the end of the year. The House will be asked to grant another £3,000 million for excessive Government spending above the Budget forecasts. That takes no account of the money that will be required to set up the BNOC and to pay for the nationalisation of 51 per cent. of North Sea interests. That is still to come.
The Government should be censured for their misguided priorities. There is no money available for the extension of nationalisation. Even if money wet-0 available, it could be used more effectively in other areas. An area in which such vast expenditure could be used beneficially is the promotion of energy conservation. If we have this money to spend on nationalisation which will produce no benefits, why should it not be spent on encouraging the more economical use of energy?
We are continually told that there is no money available to provide incentives for thermal insulation, or to provide incentives to industry to re-equip with energy-saving machines. We are continually told that there is no money available to improve the efficiency of the electricity generating system so that some of the waste can be utilised. We are continually told that there is no money available for research and development on securing the rational use of energy. Yet all that expenditure would be cost-effective: it would produce direct benefits to the national economy. It would pay for itself over a period, because it would allow us to consume less energy, thereby directly benefiting the balance of payments position and allowing us to deplete our finite resources less quickly. Moreover, an allocation of capital to the more efficient use of our energy resources would save public expenditure on financing increased capacity.
We shall increase the nation's crisis it we allow this money to be spent upon BNOC and 51 per cent. nationalisation. We shall increase unemployment and inflation. If the money is available, as the Government maintain, by spending it elsewhere we can improve the ability of the nation to get back on its feet.
The Government have made no attempt to assess the priorities. They are not interested in an energy strategy or in allocating national resources in such a way that the nation as a whole will gain the most benefit. If they were, they would drop the proposals for setting up a wasteful and unnecessary nationalised industry in the oil sector and use the funds elsewhere.
The Select Committee on Science and Technology has shown how energy conservation would produce direct benefits to the economy. If the Secretary of State for Energy has these thousands of millions of pounds to spend on North Sea participation, he should seriously consider whether the money could not be better spent in the national interest elsewhere. Even if the British economy were doing well and we were not suffering from a financial crisis, high inflation and rising unemployment, the Government's policy for the North Sea would be unjustifiable, misguided, dangerous and damaging. At this time it is absolutely suicidal. I regard it as a criminal misappropriation of taxpayers' money. We have these hugely expensive nationalisation plans, for which there is a blank cheque. I regard it as deliberate sabotage of Britain's prospects for economic survival.

Mr. F. P. Crowder: I entirely agree with everything that has been said, but would it not be only fair to the Socialist Government to enlarge on the tremendous attributes which the people have received from the nationalisation of the railways, of gas, of electricity, and so on? Will my hon. Friend enlarge on the theme—what a wonderful thing nationalisation has been for England?

Mr. Rost: I am most grateful to my hon. Friend. I should have thought that we on this side do not regard it as necessary to repeat it, because the coun-

try is only too well aware of it, but there are hon. Members on the Government side who still need to be convinced that the argument for the extension of nationalisation has never been made and has certainly never been proved. It will not do to pretend that the nation's problems can be solved by increasing the borrowing requirement, and by vastly extending the commitment in overseas loans, in order to squander that money in a way which will not produce an effective return in terms of the nation's ability to survive and solve its problems.
Time and time again the Government have stated that their North Sea participation plans will be on a "no loss, no gain" basis. Time and time again we have been told that the British and international oil industry has served the nation well. Even the Secretary of State is proud to admit that oil is beginning to flow. Time and time again we have seen the failure of the extension of nationalisation elsewhere.
Today, when the nation is faced with the severe problem of having to cut back the exorbitant overspending of the Government, it seems quite ludicrous and criminally negligent, as I have already described it, for the Government to allocate vast increases in public money in this way, building up a national oil industry that is completely irrelevant, completely unnecessary, deliberately damaging to the private sector, and deliberately sabotaging the capability of this country to survive as a mixed economy and maintain its standard of living.
Because the Government have their priorities wrong and are not prepared to order their priorities in a way which will serve the national interest, the Government should put the BNOC and their proposals for the nationalisation of North Sea oil into cold storage—and, just to be safe, they should put the Secretary of State into cold storage as well.

8.4 p.m.

Mr. Peter Doig: The hon. Member for Derbyshire, South-East (Mr. Rost) trotted out the usual old bogy of his party concerning nationalisation. We have heard it over and over again. If he cares to examine closely the facts relating to the nationalised industries, he will find that the vast


majority of them have been profitable over a very long time.

Mr. Crowder: Which ones?

Mr. Doig: Electricity and gas, to mention only two. The only time they have lost money has been when the Government in power at the time prevented them from making increases in charges, which any private firms would have made. It was only in the interests of the public that these increases were held back for a period. If the hon. Member for Derbyshire, South-East, cares to look at the record of interference by Governments of both parties, he will find that any losses occurring were for that reason.
As for output, the nationalised industries have a far better record than the vast majority of private companies. The feeling that their performance has not been good has arisen from the fact that in the main the newspapers are opposed to nationalisation.
For all my previous working life, to my sorrow, I was compelled to work for private firms, and I was amazed at the incompetence, the mistakes on a colossal scale, which were made within them but which never received any publicity whatever. We have only to look at what has happened to some big companies recently and to consider the number of them which have asked the Government for massive loans to keen them in force in this great private enterprise system?
Such companies have had to come to the Government simply because they have made mistakes. No doubt some nationalised industries make mistakes, but far more mistakes are made in private industry. All these mistakes are forgotten, however, because the newspapers do not give them any publicity. That is understandable, because none of the newspapers, as far as I know, is nationalised. If any newspapers are nationalised, I have not heard of them. Perhaps some of them have been to the Government for a loan. I do not know. They are all opposed to nationalisation and, for that reason, they give a slanted view. In view of the number of newspapers which have gone bankrupt, we know that newspapers are not so very efficient. Therefore, they should not lay down the law to other people.
I remind the hon. Member that his Government passed the Bill to nationalise the seabed. I also remind him that his Government were unwilling to gamble with the taxpayers' money in order to exploit our oil resources. It may have been for the reason that they thought it was a bad gamble. On the other hand, it may have been because they wanted all the profits for private enterprise. The fact is, however, that they were not prepared to take the gamble with taxpayers' money, and therefore they did not do it. They agreed instead to a Bill which parcelled out the oil and sold it off in sections.
When somebody gambles we do not say to him, after he has won, "You cannot have your winnings"; but that is what the Scottish National Party wants to do. This is what it has been trying to do all the time. It says "If you have struck it rich, we want a far bigger share. We want slower extraction of the oil." In other words, it wants all the time to clamp down on the profits of those who were successful with their gamble.
What about those who were unsuccessful? Does the Scottish National Party offer to give them back the money they lost, or to give them any share of the resources? I have never heard of that. The Scottish National Party does not say it at its public meetings. It has never plugged that line. The line it takes is "If you gamble and you win, we shall take as much of your winnings as possible, but if you lose we shall forget all about you."
I suggest to the Scottish National Party that, if any other source of natural wealth is found at any time in the future, nobody will gamble on it, if that is the attitude that is to be taken. No one will have the slightest interest in developing any natural resource.
I remind the hon. Member that Tory Governments know how to borrow money. It is not just Labour Governments that borrow money. It is interesting that, when they take office after a Labour Government, the Conservatives start off with a large surplus, and when they finish they have a big deficit. Surely the hon. Member knows that. He has been in the House long enough to have studied the figures. How do Conservative Governments make up the difference? Do not they borrow the money?

Mr. Rost: I am sure that the hon. Member would not wish to mislead the House. If he studies the figures he will know that the last Conservative administration repaid several thousand million pounds of debts left by the previous Labour Government.

Mr. Doig: If the hon. Gentleman looks a little closer at the National Debt figures, he will find that that statement is not strictly accurate. We have always had to start with a balance of payments deficit as a Labour Government. Invariably we have ended—and will do again if we stay in long enough—with a balance of payments surplus. We would have one now if it were not for the price of oil, strange as it may seem, and large though the deficit was that we inherited.
The hon. Member for Dundee, East (Mr. Wilson) said that we were not taking enough money from the oil companies. He complained that we were taking only, 70 per cent. and that this was lower than he expected. That brings us back to the gamble. If someone gambles, are we being very generous in giving him back 30 per cent., bearing in mind that he has taken the risk?
The Scottish National Party would make it worse. It wants a slower rate of extraction. Its representatives have said so again and again. The result of that, of course, would be that the point might be reached where it was no longer profitable and that the oil companies pulled out altogether. If that was their experience, nothing would ever come back. If someone gambles and wins, he has the right to collect most of his winnings.
If the Scottish National Party ever got power, who would protect the oil rigs in the North? Sea? Scottish National Members object now to the British Navy being used to protect our food supplies and our fishermen even a very limited scale.

Mr. Gordon Wilson: Would the hon. Gentleman care to say, first, what food supplies the British Navy is capable of defending these days? Secondly, if he is referring specifically to the fishing industry, would not it be better if the Navy dealt with the fishing boats fishing in what should be Scottish territorial waters if the limits were extended?

Mr. Doig: The hon. Gentleman knows that fish is one of the best forms of food for the people. It is much cheaper than

meat. When we consider that and then go on to consider that we are prepared to allow a small country, without international agreement, to extend its limits to 200 miles and stop the traditional fishing which has gone on from this country by fishermen for a very long time—

Mr. Gordon Wilson: It is not Scottish—

Mr. Doig: I am not a narrow Scottish nationalist like the hon. Member for Dundee, East. I am a British citizen and I look at the situation from the point of view of Britain as a whole. Without any legal backing, British fishermen are being prevented from fishing in their traditional areas. When we decide very reluctantly to send naval vessels there to protect these fishing boats from being vandalised, which is what it amounts to, lo and behold, the SNP objects to naval vessels even going there. If Scottish National Members are not willing to defend our food supplies, does anyone believe that they will be capable of defending our rigs and the oil in the North Sea? I should not like to be in the shoes of the oil companies if they have to supply their own navies as well as everything else. But that is what is advocated by the SNP.
According to the SNP, what started off as North Sea oil was, when the party discovered that this gimmick could win it a lot of votes, rapidly renamed "Scottish oil." It meant that, instead of having to divide it amongst a population of 50 million, it need only be divided amongst 5 million. However, the Shetlands have most of this oil off their shores. Applying the same logic and renaming it "Shetland oil", accepting the Scottish oil argument, the incentive is even bigger. Although the SNP makes promises at election time about what it will do for 5 million people in Scotland with the revenue from the oil, how much more can the Shetland people promise, not to 5 million, but to 5,000 people with the same revenue? The Shetland people could all become oil sheiks and millionaires. So the incentive there is even greater.
Anyone starting along this road must remember that he may not be able to stop just where and when he wants to. I suggest that the SNP should keep this in mind and not go along a dangerous


road of this kind. It is rather like going down a steep hill without brakes: it is very risky.
Then the SNP claims that the recent local election results in Scotland show that the party will form the next Government. But let us look at the facts. In the last General Election, in which the SNP did better than ever before, even with all its promises of what it would do with the money from North Sea oil, it managed to return 11 Members to the House. However, the Labour Party returned 41 Members. On that basis, where is the mandate for the SNP in Scotland from the Scottish people?
Then again, we had the referendum on the EEC. What was the result in Scotland? It was that two-thirds of the Scottish people wanted to remain in the EEC. It would be totally illogical to think that they wanted to stay in a bigger grouping and at the same time to move to a smaller grouping.
There is one big fallacy in the argument of the SNP. If it is followed through, it means that in any part of Britain where natural wealth is discovered the money resulting from it should be spent solely on that area. Can anyone imagine the outcry from those self-same people who represent the SNP in the House if the oil had been discovered off the south-east coast of England, the wealthiest part of Britain? Would they then have said "After all, it is their oil, so we had better allow them to have all the profits and none should come to Scotland"?

Mr. Robert Hughes: Not a chance.

Mr. Doig: That is their attitude. If we work along the basis that, wherever natural wealth is discovered it should be confined to the people round that close area, all that will happen is that in Britain at some time in the future we shall have highly wealthy pockets and very poor ones.
The other danger that people never realise when they listen to this one-sided story from the SNP is that in the only time in history that Scotland may be slightly better off than the rest of Britain, we forget completely what has been done for our country in the past. We used

to have an unemployment level of 50 per cent.—

Mr. Gordon Wilson: It is still very high.

Mr. Doig: It is nothing like 50 per cent. When we used to have unemployment of 50 per cent., we received Government help to such an extent that we finished up with too many industries and screams from private businessmen to the then Board of Trade to stop bringing any more new industries to the City of Dundee. That is how successful it was using British money to help our city and the people of Scotland in general. I was one of the 38,000 unemployed in the city of Dundee and knew what working conditions were like. Compared with working conditions today, they were shattering. I wish that the hon. Member for Dundee, East had seen them, because he would have had a better appreciation of the problem.
The one time in our history when we are slightly better off, we decide to break away from the rest of the United Kingdom. What happens when in 20 or 30 years' time the oil dries up? The people of Scotland will be unable to vote to go back into the United Kingdom because the English aryl Welsh will probably not take them back. If I were an Englishman, I would not take them back.
The Scottish National Party has misled the public on a colossal scale with wild promises that it could never carry out. It has succeeded in convincing a number of people. However, we can convince some of the people all of the time and all of the people some of the time, but not all of the people all the time.

Several Hon. Members: rose—

Mr. Deputy Speaker (Sir Myer Galpern): Order. The Front Bench speakers have kindly agreed to postpone the commencement of their replies until 9.10 p.m. Therefore, there are roughly 50 minutes in which six hon. Members may speak. If each hon. Member takes only eight minutes, it can be done.

8.21 p.m.

Mr. Alexander Fletcher: I listened with great interest to the speech of the hon. Member for Dundee, West (Mr. Doig), who believed that it was more important to deal with


separatism and the Scottish nationalists than with the question of Government policy for North Sea oil. Too often this seems to be becoming something of a mania for Labour Members, because the problems facing Scotland are the same as those facing Britain, namely, the inadequacy and irrelevance of Government policies as applied to Britain as a whole. It would be more beneficial in debates such as these if Labour Members would address themselves to the main question of policies affecting the United Kingdom as a whole and make a bigger effort to get those right, because by so doing we should go a long way towards solving the temporary difficulties that exist in Scotland at present.
It is reasonable to have expected that after a year in which two major Bills on North Sea oil have been enacted—the Oil Taxation Bill and the Petroleum and Submarine Pipe-lines Bill—the Government would welcome this opportunity and debate in Opposition Supply time to explain to the House and to the country at large the tangible benefits that may emerge and will flow from oil from the North Sea. Once again the House and the country are disappointed because in his opening speech the Secretary of State spoke, yet again, about the objectives of Government policy rather than about the reality in any practical way. He spoke in a manner that was totally divorced from the reality of the problems facing Britain and the development of North Sea oil.
It is a great pity that the Secretary of State and his colleagues continue to insist that nationalisation is a good thing, that it is the best patent medicine that the Government can offer to the British people. The truth of the matter is that it is the only medicine that they have to offer for any problem that faces this country.
Every practical example of nationalisation proves time and again just how unworkable nationalisation is in practice. That is why in his speeches the Secretary of State always sticks to theoretical examples and to an emotional statement that all that is being done is being done for the good of the people, without explaining what benefit will accrue to the people from any further nationalisation. The people know only too well the dis-

advantages that derive from the amount of nationalisation that exists at present.
We have had two examples of this today—one from the Secretary of State and one from the Chancellor of the Duchy of Lancaster at Question Time. The Chancellor could not then name a single benefit which would accrue to the British people from the Government's participation policy. I asked him specifically this afternoon how the balance of payments would benefit, whether we would get oil more quickly, whether we would get more revenue from the oil, and whether participation would provide a greater incentive for companies to search for new fields in the North Sea. Neither the Chancellor of the Duchy nor the Secretary of State has answered those perfectly simple and straightforward questions. After two years in office they should be able to give a reply.
It was very much in contrast with this head-in-the-sand attitude of Labour Members that my right hon. Friend the Member for Wanstead and Woodford (Mr. Jenkin) spelled out clearly and honestly the British people's concern at the Government's policy of borrowing and spending now with the not-too-distant prospect of vast interest charges when the oil starts to flow. My right hon. Friend issued a warning which the country will heed and which Labour Members will ignore at their peril. He hit upon the danger point of the Government's policy, not just for the North Sea but for the economy generally. The British people will put up with difficulties and hardships today if they can confidently believe that the flow of oil will bring relief in the future, that there is some light at the end of the pipeline.
All Britain will be justifiably furious if in a few years' time the people find that, having made sacrifices today, they are denied the benefits because they have been squandered through nationalisation, bad housekeeping and a sheer inability of Ministers to take proper advantage of the opportunities offered by North Sea oil.
The key question in this debate concerns the specific advantages of Government policy to which we can look forward. We want to hear something definite now rather than to reply upon targets or objectives for the future. I hope we shall hear that from the Minister


of State. I happily offer him my congratulations on his promotion. I hope that in his reply he will try to disregard many of the contributions by his hon. Friends which did not go to the heart of the matter, and will deal with this key question. I believe that this is how the people see the situation. If there is greater concern in Scotland it is because we in Scotland are in many ways a little closer to the action. We can see the activities and we know what is happening. In the Firth of Forth, off the Fife coast and up the East coast of Scotland, oil-related activities are in progress. Most Scottish Members, including my hon. Friend the Member for Ross and Cromarty (Mr. Gray) are in close contact with what is going on.
We Scots are canny by nature and we do not relish the prospect of spending a decade developing North Sea oil and the following decade using the profits to pay the interest charges on borrowings from third countries. Nevertheless, that is the likely effect of present Government policy. That is what concerns Scotland. That is the key to the problems which exist in Scotland. There is no selfish desire to ditch the United Kingdom for a few years so that Scotland can indulge in some bumper oil boom, as depicted in the Scottish National Party propaganda. Scotland is concerned that the wealth of the North Sea should be husbanded for the benefit of all the British people.
We in Scotland, like the rest of the United Kingdom, depend on a strong and prosperous British economy for our success and survival. We shall continue to depend on that much more than on oil or on any other single commodity.
I was particularly pleased that when opening the debate my right hon. Friend the Member for Wanstead and Woodford emphasised the dangers inherent in the Government's extravagance and debt-ridden policies. That is why this subject was chosen for debate. There is nothing more important than that we should try to attract the Government's attention to the inadequacy and total failure of their North Sea oil policy.

8.32 p.m.

Mr. Gwilym Roberts: I am glad that the hon. Member for Edinburgh, North (Mr. Fletcher) dealt with the matter in British terms and not in

Scottish terms, as some previous speakers did. However, I was alarmed at the note of gloom he struck. It seems that whenever I hear a speech from the Opposition it is full of gloom and despondency. Indeed, in these days the Opposition seem to have a vested interest in gloom.
I should like to strike a rather different note and to suggest that we shall shortly see a British economic miracle. Oil has a vital part to play in that miracle. I do not say that because of the contribution which it can make to the balance of payments. We all realise how valuable that contribution is. The Government have already taken steps to wipe out the non-oil deficit, and with the coming of oil there will be enormous progress in that direction. However, that is not the basis of my argument. The basis of my argument is the investment and industrial confidence which is produced by energy sources.
Let us examine the whole history of industrial investment and energy sources. Invariably one finds, in European terms at any rate, that the growth of major energy sources is associated with the growth of industrial investment. I believe that by the end of 1976 the fact that some of the oil is coming and that there is more to come will completely revolutionalise confidence in industry. I have spent part of my life in the area of economic forecasting. I predict that the industrial turn-up will take place more quickly than many hon. Members on both sides of the House anticipate. We may see the beginning of it towards the end of 1976. I believe that the turn-up will be more rapid, and greater, than many forecasters expect.
My right hon. Friend the Prime Minister frequently tells us that in the 1980s we shall be responsible for 45 per cent. of the EEC energy production. In my view, that is the key to industrial growth and industrial investment generally. Of course, this type of growth is dependent on the policies that the Government are prepared to generate. Earlier, my hon. friend the Member for Dundee) West (Mr. Doig) discussed the major argument for participation. He dealt with the important part that participation must play if the country is to get the full benefit of our oil resources. Participation is important in pricing.
There must also be no yielding to the racialist and tribalist arguments sometimes advanced north of Hadrian's Wall and west of Offa's Dyke. This is an economic problem, which has nothing to do with obscure tribalist ideas.
The third basic condition is that industry should be adapted and prepared for this new spurt of industrial investment. We have heard talk of winners from Chequers. In industry, it is not just a question of finding winners but of creating them. It is important to have the sort of industrial policies which can create them.
Energy development should be regarded as a whole and oil should not be used in areas where other forms of energy are usable. As the oil accumulates, we must not abandon our commitment to the whole energy industry. Electricity generation should be left largely to coal, perhaps associated with nuclear fuel, and oil should be used in other areas. That is important if Britain is to have, as I believe it can have, the sort of economic miracle that will dwarf anything that we saw in Germany.
I believe that the future is bright, that the turn-up will come. The Government must generate the sort of policies to enable British manufacturing industry and industry generally to take full advantage of the considerable opportunities before us.

8.38 p.m.

Mr. Neil Macfarlane: I am one of many hon. Members on this side who would applaud if the economic miracle charted by the hon. Member for Cannock (Mr. Roberts) came about. I am certain that it would receive widespread approval. However, we may think that the Government's present path to that miracle is a little obscure and fudged in the nation's eyes.
I should start by saying that for the better part of 20 years I was an executive with BP, although my only contact with the organization now is based on the fact that it is the custodian of my pension. I hope that the voters of Sutton and Cheam will not send me back to seek that pension in the near future.
I have had some experience of the oil industry and I have its interests at heart. I hope that the hon. Member for Dundee,

West (Mr. Doig) would forgive me if I said that when I entered the Chamber earlier I had the impression that the debate was about devolution rather than offshore oil. There is widespread concern among the oil fraternity about future supplies in this country. This Government have not assessed the parabola of supply and the associated problems after 1990.
The United Kingdom requires about 120 million tons per annum of crude oil. Certainly, towards 1980–81 we shall be moving towards that figure. We need to know what the Government are doing to encourage more investment in order to ensure greater exploration throughout the 1980s. I hope that Lord Kearton and Lord Balogh understand fully what is required and will not underestimate the nature of their task with the new Corporation. Alas, my fears tell me otherwise.
The American companies, which hitherto have provided large injections of cash into North Sea exploration, are extremely concerned about Government policy. It is well known in oil company circles that many of them have been deterred from coming here and are looking for other seas to explore, particularly in the Gulf off the New England coastline. It is a sad commentary on the Government's creation of the new corporation that they have unquestionably deterred much-needed investment in this sector.

Mr. John Smith: Will the hon. Gentleman explain the logic of American oil companies leaving Britain because of our participation policies and going to the Gulf?

Mr. Macfarlane: It is a sad commentary that the hon. Gentleman is patently unaware of the situation, for that is what is happening. It is a fact of life. He should acquaint himself with what is happening. The Government have deterred a lot of potential investment in the North Sea by their actions. Unless they understand what the oil companies are saying, they will founder within the next year or two. It is sad that the hoped-for supplies throughout the 1980s will not reach the estimates made by the Conservative Government and the oil companies. I congratulate the Minister of State on his promotion, but I hope that he will give


constructive thought to the situation and tell us how he sees the future of our supplies throughout the 1980s and 1990s. This is a very important aspect.

8.43 p.m.

Mr. Robert Hughes: Whenever we discuss North Sea oil, it seems that we are either super-optimistic or super-pessimistic. On the one hand, North Sea oil is seen as the national saviour, with all kinds of benefits to the country; on the other hand, it is seen as a despoiler of the national heritage, with nothing but evil to come from it. As so often, the balance of judgment lies between the two.
One certain factor, however, is that the resources available are immense. In terms of self-sufficiency, the oil will give a great deal of benefit. We shall be able to have a great deal of freedom from the trauma of the balance of payments, and that could give the economy an enormous boost. The revenues will enable us to do a lot of things that we now find it difficult to do—for example, to spend more on housing, the National Health Service and the social services. We want to see the money used in the broadest possible way.
But we are not yet in the position of having such revenue available, and the problem at the moment is how to benefit from the work going on in order to attain industrial development. It is calculated that about £5,000 million has been spent on North Sea development, and that by the time it is fully developed about £50,000 million will have been needed. There is here a tremendous potential industry which can do extremely well if it has the will. But oil technology, exploration and production are not easy to come by. There has been a tendency on the part of the oil companies to neglect the British market. That is why I welcome the Government's initiative in concluding an agreement with the oil companies operating in the North Sea to produce a code of practice with regard to purchasing.
My hon. Friend the Minister of State has done an excellent job in bringing in that code of practice, and the oil companies are to be congratulated on being willing to go along with the production of such a code. I hope that there will, as a result, be much more work coming to British industry, together with a recognition that a good deal has already come.
I find it odd, however, that such an agreement should have been necessary in the first place. It is a little curious that a code of practice is needed. What has happened to the thrusting adventurous commercial instincts of British industrialists, the sort of people who are always lauded to the skies by the Tory Party—people bursting with initiative and wanting to get into these new opportunities if only the Government would not hold them back? Why have we heard them saying that they have not had a fair deal and that the oil companies have not really been playing fair wth them? Perhaps there is a fault in British capitalism itself. Perhaps they are not all that they are made out to be by the Tories. Certainly, the desire to go forward without Government help does not seem to be there.
Commercial enterprises in this country are always coming to the Government for assistance, either before the event when they see trouble coming, or when they find that things are not going their own way. It would do a lot of good if the Tories would sometimes recognise the role that the Government have played.
Since exploration began, there has been constant concern, and we have wondered how we could ensure that the people would benefit from the exploration and development of the North Sea oilfields. How could we prevent the rape of resources for the benefit of the few? How could we prevent history repeating itself, remembering, as we do, the way that the coal mines were exploited? Anyone who understands the history of coal mining knows how the owners took out as much as they could and put very little back.
In my view, the Government have chosen the best course in setting up the British National Oil Corporation, because it will have the right to explore either on its own account or in partnership with companies now in existence or with those that may come on the scene, and it will have the right to produce, the right to refine, and the right to develop petrochemicals and to do all manner of things related to North Sea oil. I believe that we shall see public enterprise at its best in the operation of the BNOC. The Corporation has the capacity to be of great benefit to us all.
The Conservative Opposition are always complaining about nationalisation. They


should remember that it was that rabid radical, Sir Alec Douglas-Home, as he then was, who nationalised the basic asset of North Sea oil. That should never be forgotten, and I pay tribute to him for seeing beyond narrow party advantage and party dogma and recognising that these assets should be nationalised.
The Tories always denigrate nationalisation, saying that no one can point to a nationalised industry that has been a success. I can point to several that have been successes. For example, we hear little about the Atomic Energy Authority, but the work done by that Authority in all the fields it has tackled has been an outstanding succeess. We hear very little, incidentally, about British Airways, but British Overseas Airways Corporation and British European Airways are two examples, now combined in British Airways, of the most outstanding airlines of the world. I defy any hon. Member to say otherwise. If it had not been for the great purchases that our airlines made, we should not have had an aircraft industry in either engines or airframes. These are outstanding achievements, and it does no good to run down nationalisation on every possible occasion.
For far too long, public ownership has been confined to industries desperately in need of capital and allowed to run down for a long time. I welcome the decision that, for once, we shall get in on the ground floor. Hon. Members make the fair point that they expect the BNOC to operate on a commercial basis, that it should make its judgments with the idea of making profits, or surplus value—whatever one cares to call it—but certainly on the basis of taking normal commercial judgments. But what happens when the Government do take ordinary commercial judgments?
Let us take the example of Burmah Oil, which was in difficulties and had to seek Government assistance. There was an immediate complaint by the Conservatives that the Government were not treating the shareholders properly. The Government were, in fact, behaving like a normal commercial organisation, taking over assets at the best possible price. We are being asked to subsidise the shareholders. That is a curious way for the Conservatives to behave. They want their bread and butter at the same time, and

they want their bread buttered on both sides.
I want to say something about the concern we all have for the conditions of people working in the North Sea. No one who does not know the North Sea can imagine how hazardous the conditions are. Through my family connection I have knowledge of those conditions. I know that my right hon. Friends are concerned, and that the Department of Employment is also involved. Many of those who work in the North Sea are not covered by industrial relations legislation. If they feel that they have been unfairly dismissed they cannot appeal to the industrial tribunal
Recently, in at least six cases in the north-east of Scotland, the tribunal has said that it has no jurisdiction, because of the deficiency in the law. That deficiency is the responsibility of the Conservatives, who, when they were in Government, excluded people working in the North Sea. In the Employment Protection Act we have taken the power to make Regulations. There must be consultations with the industry and the trade unions. I am the last person to say that there should not be consultations, but I ask my right hon. Friends not to drag the consultations on for too long. I ask them to conclude them speedily, so that we may have the Regulations as soon as possible.
I cannot end without saying something about the attitude of the Scottish National Party. When my hon. Friend the Member for Dundee, West (Mr. Doig) said that British vessels off Iceland were being protected so as to safeguard our food supplies, I was appalled when the hon. Member for Dundee, East (Mr. Wilson) said that it was English vessels that were being protected, as though English trawlers were not entitled to protection by the British Navy. That kind of narrow nationalism does the Scottish people no credit. It also neglects the fact that there happen to be Scottish trawlers there as well. Whether that makes it better or worse is neither here nor there.
There is no such thing as Scottish oil. We want the resources used for the benefit of everybody. When English Members complain about Scottish vessels fishing off the south coast of England we do not hear from SNP Members that the fish are English. The fish are apparently there


for Scottish fishermen, whatever part of Scotland they come from. Let us have less of the humbug from the SNP.
We Socialists are Socialists because we believe that all people wherever they are—in Great Britain, Europe and the world—have essential basic interests. We want to see people change their environment and benefit from their natural resources. For far too long the ordinary people of this country have failed to benefit from the country's resources, because those resources have been controlled by the few for the few. The Government's position on nationalisation and participation is to the benefit of the people of Britain as a whole, and working-class people in particular. I give the Government every support in what they are trying to do.

8.55 p.m.

Mr. David Crouch: When the House discusses energy problems, I tend to think in terms of coal. I know that the House will forgive me if, even when we are examining the problems of resources from the North Sea, I still tend to think in terms of our coal resources. I do not take this view because I am hidebound or old-fashioned in thinking about our coal resources, but because I believe that it is right to put some figures before the House.
We in this country consume the equivalent of 350 million tons of coal a year. I am told that that amount of coal, if put on a base in Trafalgar Square, would reach three times as high as Mount Everest. We use a third of that amount in coal and the rest of our energy supply comprises oil and a small contribution from nuclear resources. That is our energy pattern in this country. We rely mainly upon oil as our source of energy. What worries me is that we are continuing to rely on oil as our main source of energy in the immediate future without considering other sources of energy.
I am concerned about the fact that we appear to be slowing up the development of the extraction of new coal resources, particularly at Selby. We talk about being self-sufficient in oil terms in this country within the next five years, but we do not hear much about developing the new Selby coalfield within five years. Rather, we are told, it will be within a period of 10 to 15 years. We are told a great deal about the problems in that

coalfield. It has been said that the London to Edinburgh line will need to be diverted at a cost of £30 million, and we also hear about environmental problems at Selby. We are sitting on a source of energy that is easily worked, and yet we are not giving that source of energy the right degree of priority. That is why I wish to emphasise, even in a debate on oil, the importance of coal as an energy source.
I am concerned how we react to the great opportunity that exists in the North Sea today, and I am also concerned about the vast investment required to extract and deliver oil to our shores from the North Sea. The investment amounts to £18 billion between now and 1983. We know what that cost means to us as a nation. We also know that last year it cost us about £4,000 million to import oil, mainly from the Middle East. Therefore, it is worth expending the vast capital sum in the North Sea oil resource because it is costing us so much to import oil. However, the investment per barrel of oil in the North Sea amounts to between £2,000 and £4,000 per barrel, whereas the comparable figure in the Middle East is £100. In economic terms we are dealing with remarkable figures. I am saying not that we should not make this investment but that to avoid spending enormous sums on importing oil, we should consider other forms of investment.
We are talking in the short term about the period up to 1985. We should be looking at the period up to the end of the century. By that time we should probably have exhausted North Sea gas resources and it is likely that, by then, we shall have exhausted oil from the North Sea as well.
I should like to be given the Government's thinking as to the situation within the next 25 years. What investment do they believe is necessary to embrace other sources of energy in our island. We are told that all will be well in five years' time because the oil will be flowing, we shall not need to import oil from the Middle East, and indeed we shall be members of OPEC. We are also informed that the Government consider that investment to be worth while. But what plans have the Government for investment in other forms of energy for our children at the end of the century?
I recall a lecture by Sir Jack Rampton which I read recently, in which he spoke of possible new sources of power which we ought to be considering, such as wave power—that is, tidal power—wind power and solar energy. I even heard last week of geothermal energy, which is concerned with hot rocks. Large amounts of money are required for investment in the development of these other possible energy sources, but we should not be frightened of those figures.
I believe that wave power around our island is probably the most promising source of energy, but solar energy must not be discounted. It is not necessary to live in the deserts of Saudi Arabia to experience the value of solar energy. Solar energy can be obtained even in a cloudy climate such as we have in this country. Today solar energy is not just a possibility, it is a probability, and, indeed, I would say that it is a reality. Last Saturday a constituent, an enterprising business man who had obtained a patent for developing solar energy in this country, came to see me to discuss the possibility of making the necessary approach to the Department.
Also there is wind power. I hope the House will not think it facetious to talk of windmills again. I am told that 1,500 windmills 100 ft. high will generate energy equal to that produced by the average power station in this country. We certainly have enough wind. Some hon. Members have referred to the wind in the North Sea, but the wind in my constituency last week was over 100 m.p.h., and that is near Dover.
I hope that the Minister of State will assure us that the Government are not taking a short-sighted view, that they are not bemused by the opportunity presented by North Sea oil, and that they will consider the sources of energy which will be available in the next 10, 15, 20 and 25 years and how much investment they are prepared to put into the development of those energy sources.

9.2 p.m.

Mr. Russell Fairgrieve: This debate is about the effects of Government policy on offshore oil. The matter to which I wish to refer in particular has been touched on by my hon. Friend the Member for Sutton and

Cheam (Mr. Macfarlane). Already doubt has been expressed by the national and international oil companies in the North Sea as to how they stand. This doubt is the result of Government policy. Those companies are now worried. It was no Government, no bureaucracy, no Civil Service which initiated oil development in the North Sea a decade ago; it was private competitive industry. Those are the people who got the oil from the North Sea, and they are the people who are now being clobbered.
Now we have the BNOC, which, in my opinion, is totally and utterly unnecessary. We can get everything we want from the North Sea without any more nationalisation. We can get it with taxation, controls and various Government Regulations, without the Government trying to become entrepeneurs in a difficult competitive industry. What interested me as a member of the Standing Committee that considered the Petroleum and Submarine Pipe-lines Bill was the fact that the Minister kept saying "Here is a new-style corporation, no longer the Morrisonian type of nationalisation, which does not work." This was nothing like the nationalisation of coal, the railways and the steel industry. This was something new. It was to be competitive, commercial and up to date. The first decision that was taken on this new competitive organisation was that the BNOC was to be relieved of the necessity to pay petroleum revenue tax. That decision must have been interesting to the Corporation's competitors.
The second decision was to locate the Corporation's productive headquarters in Glasgow. The oil is in the North Sea, off Aberdeen, yet the headquarters is to be on the Clyde, although all the oil companies, national and international, are putting their production headquarters in Aberdeen. Is that a commercial decision?
After looking around to see who should head the Corporation, the third decision was taken—to appoint a retired Socialist sympathiser from the textile industry to head this new, virile BNOC. Those first three decisions are not commercial; they are doctrinaire and Socialist.
The oil revenue should be spent on the infrastructure of Scotland. It should be going to the oil capital of Europe, to be spent on a dual carriageway from


Edinburgh, via Perth and Dundee, to Aberdeen. That is the No. I call on the oil revenue. The infrastructure cost of the oil areas should no longer be borne by the ratepayers but by the taxpayers.
The most important aspect of the oil is not the length of time for which it will last but what we learn from it. We should regard the North Sea as a technical college on our doorstep and treat it as an opportunity to learn, so that at the end of the century, when there is drilling for oil in the China Sea or off the South American coast, and people want experts in offshire oil technology, they will go to Scotland for it, just as they went to our shipbuilders on the Clyde in the first Industrial Revolution.
For the first time in history, the oil industry has not had to go to a desert it has been able to come to a university city, with its technical colleges. We have the university and the Torry and Rowett Institutes. We should take advantage of this opportunity and learn to become the greatest marine technologists in the world. Apart from the oil under the sea, there are minerals and food. Here is a chance to learn. We must not adopt the philosophy of narrow nationalism and selfishness. What we learn from the North Sea we must be ready to contribute to Scotland, the United Kingdom and the world.

9.8 p.m.

Mr. Hamish Gray: I join hon. and right hon. Members who have offered their congratulations to the Minister of State on his promotion. Those of us who served with him throughout the Committee proceedings on the Petroleum and Submarine Pipe-lines Bill know that there he won his spurs, and we wish him melt in his new post. I had hoped to be able to add my congratulations to Lord Balogh and wish him a happy, peaceful and permanent retirement, but the Secretary of State said that when the names of the BNOC were announced that of Lord Balogh would certainly be among them. There were cries from the Opposition Benches, not unnaturally. In a sense it is appropriate that he should go to the BNOC because it is rapidly becoming an over-seventies club. We can only hope

that what it lacks in youth it will make up for in experience.
The debate has highlighted the concern which exists, particularly on the Conservative side of the House, about the future of the whole British oil industry. While some of us would perhaps not go quite as far as my hon. Friend the Member for Bedford (Mr. Skeet)—who suggests that we must make as much money out of oil as quickly as possible before the price decreases—others have voiced genuine fears about what is happening in the industry.
The Government's policies have done nothing to give confidence to any of our major industries. The damaging legislation of the last Session of Parliament has already been followed by a Bill to nationalise the shipbuilding and aircraft industries and by horrific proposals concerning dock labour. Few industries have escaped the effect of Government interference. Those which have not been caught directly will surely have beeen adversely affected by the spin-off results of various Government policies.
The constant belief of Labour Members that nationalisation—or at least sizeable Government involvement—is the cure for all commercial or industrial difficulties is incredible in view of some of the devastating results which such theories have produced in the past.
I think it was the hon. Member for Aberdeen, North (Mr. Hughes) who asked. "What on earth is the matter with all the private companies in this country today? Why have not all those private companies been getting into the oil business in Scotland? What is wrong with them?" The answer is quite simple. It is that private companies, and especially smaller companies, have practically been taxed out of existence, and that as long as Governments bring in legislation which is so discriminatory against this section of the community, we can hardly expect the entrepreneurial type of approach for which the hon. Gentleman was looking.
Today, however, it is the direct effect of Government policies, particularly on the oil industries, that we must examine. But before I deal with our views on this matter, I should like to return briefly to the remarks of the Secretary of State. I thought that it was extremely unfair


of him to attack my right hon. Friend this afternoon for not mentioning the Burmah shareholders.
My right hon. Friend made perfectly clear, in a powerful statement last week, the views on the Conservative side of the House regarding the Burmah situation. I will tell the right hon. Gentleman, for his information, that at this very time a group of Burmah shareholders—I am led to believe that it is quite a sizeable group—is considering the issue of a writ against the Government and the Bank of England.
The situation is very delicate, and I shall not comment upon it at this stage, but I think it is as well for the right hon. Gentleman to know that some of these shareholders feel so strongly in the matter that they believe that their case could well be tested to their advantage in the courts.

Mr. Benn: The hon. Gentleman will know that I was referring to what his right hon. Friend said last Wednesday about the offer in respect of the North Sea assets. My statement had nothing whatever to do with the BP shares, and the point to which I was drawing the attention of the House was that, having described our efforts as highway robbery on a Wednesday, the right hon. Gentleman thought it so unimportant as not to merit even a back reference in his speech today in a Supply Day debate, which we understood the Opposition had taken in order to reinforce his criticisms last week. But we did not hear a single word about it.

Mr. Gray: The right hon. Gentleman is usually very skilful at defending himself, but I am afraid that today he has not improved the situation one little bit. Indeed, that was not the point I made at all. I was merely saying that it was quite wrong of him to attack my right hon. Friend when he had made his position clear. It may be—we do not know—that perhaps my right hon. Friend knows more than the right hon. Gentleman or myself about the situation. That may well have been the reason why he did not raise it.
The situation on the financing of North Sea oil exploration is quite simple. Practically all the financing has been private

financing and, although Ministers go to great pains to point out the limitations of the policy of the former Conservative Government, it is undeniable that the large sums of money which have been invested in this area were achieved only because the investment seemed worthwhile at the time despite the enormous risks involved, and the United Kingdom is now benefiting as oil starts to flow.
BP has estimated that £18,000 million will be required to develop the United Kingdom Continental Shelf. This is £9,000 million-plus on the basis of the policy of 51 per cent. participation, and that seems a conservative figure compared with some forecasts. For example, one national newspaper recently estimated anything up to £50,000 million for the ultimate development of the reserves. Some of the reserves may never be developed due to technological difficulties. All this investment is being put at risk because of the 51 per cent. participation insisted upon by the Government and because of the creation of the British National Oil Corporation.
My hon. Friend the Member for Horsham and Crowley (Mr. Hordern) was very worried about the borrowing requirement. We know the attitude of the Government that participation will cost very little more than a few hundred million pounds. This has not convinced anyone, and I would be extremely happy if the Minister cared to elaborate a little on this. It seems to me that, apart from the present Cabinet, no one else believes that this is how the 51 per cent. will be achieved.
Both these were wholly unnecessary. A regulatory authority could without any difficulty have dealt with controls, depletion, pipelines and refineries. The normal taxation via the Treasury with an excess profits tax to cream off the windfall profits could have been achieved quite easily.
I was interested earlier to hear the hon. Member for Dudley, West (Dr. Phipps) make a very worthwhile contribution to the debate and give his view about the fears which exist in the oil industry at present. Opposition Members have been arguing this case for some time. We found it most refreshing to hear a Government supporter who has such a direct interest in the oil industry giving his views. Apparently the hon. Member


for West Stirlingshire (Mr. Canavan) 'thinks this amusing. He finds the most amazing things amusing. It is interesting Ito hear the views of someone with such knowledge as that of the hon. Member for Dudley, West.
Here, we have a healthy industry with a good record and a sound future which in the eyes of this Government appears to have committed only one sin in that it makes profits. What is to happen to it? It is to have the fatty sludge of nationalisation injected into its veins, narrowing, if not completely blocking, its coronary arteries. There can be only one result. It will never be the same industry again. It will never achieve quite the figure that it has in the past—a figure needed in high risk areas.
The former Minister of State—the member of the BNOC Board elect—said in another place that the North Sea was no longer a high risk area. I do not know that the North Sea Oil Company Limited would agree with him. On 3rd December, it put out a Press release in which it said:
North Sea Sun Oil Company Limited…announces that the exploratory well 22/8–1 will be abandoned and plugged due to severe mechanical difficulties. Any future drilling on this block will be dependent upon technical studies now being encountered.
I went to the trouble of checking on the amount of money which this consortium had sunk, if hon. Members will excuse that expression, in this venture. I found that from 22nd July, when the rig was placed, until the beginning of December the costs have been in excess of £4 million. In what is not considered a high risk area this is quite a lot of money.
Considerable apprehension exists among the oil companies and others connected with the oil industry. Not only in investment do we see the results of the Government's doctrinaire attitudes. All connected with the industry fear what the future holds. How far will Government participation go in relation to the 51 per cent. and how far will the net be cast?
Nowhere is there more apprehension at present than in platform building. This is an extremely labour-intensive part of the industry, for 25 per cent. of all direct employment in the oil industry is in platform construction. Orders have

not approached anywhere near Government forecasts, and the question of companies deciding whether they should go for steel or for concrete platforms has nothing to do with the situation. There is great apprehension about Government policy. That is why there is such a scarcity of platforms. It is unlikely that in 1976 there will be more than six orders placed and it is more likely that only four will be placed. Professor D. I. Mackay, Professor of Political Economy at Aberdeen University, is quoted in the Fraser of Allender institute Speculative Papers No. 4 as saying:
The initial Department of Energy estimate was that 55–80 platforms would be required for the UK sector of the North Sea by 1980 with the total number ordered likely to be near the top end of that range. Our own estimate first prepared in early 1974 and published in February 1975 has always been substantially lower than this and suggested a demand of 52–64 platforms to 1980 with a 'best guess' of 57. The Department of Energy latest estimates (43–61 platforms with a 'best guess' of 53) are consistent with this view.
It seems strange that a university study group can get its figures more accurate than those at the Department of Energy, where one would expect that all wisdom in this area lay.
In addition, those employed in the manufacture of platforms are extremely worried. Last week they visited the House of Commons and saw the Secretary of State. I had the privilege of meeting some of them afterwards. At that time, 27th November, the energy correspondent of the Glasgow Herald wrote:
It is ironic indeed that only a couple of years ago it was widely felt that more platform sites were urgently needed if orders were not to be lost to foreign yards. At the time the view was valid, but the unforeseeable decline in North Sea activity over the past year has caused uncertainty in the platform building industry. At present all the Scottish yards have platforms under construction but several of these will be completed next year and unless new orders are placed there will be redundancies.
The shop stewards were extremely worried. They expressed their fears freely to me.
The Secretary of State has to take a decision on this matter. It will be a difficult one. He has to decide whether he should influence the placing of orders. If he so decides, he must give preference to yards which can offer certain criteria. It is essential that the past record of


delivery should be considered. The record of labour relations in the yard must be taken into consideration. Consideration must also be given if a highly skilled team of management and work force is already functioning well, and if redundancies would lead to high unemployment due to lack of alternative work. Where people have moved their homes and their families to a new area, that is a factor which must be considered, too.
It is little wonder that the shop stewards are bewildered. On the one hand, whenever they meet the Secretary of State for Energy they are told that orders are very scarce and that there are unlikely to be more than four or six next year. At the same time they hear the Prime Minister on the radio or television speaking at the Guildhall about the flow of oil becoming a torrent.
I shall shortly be meeting the management and, I hope, representatives of the work in my constituency at Nigg Bay. Here is a yard which offers unique facilities, has a spendid record, is close to the majority of fields and enjoys a direct, obstruction-free route. Nevertheless it has no follow-up order.

Mr. John Smith: That yard is very busy.

Mr. Gray: It is very busy at present and it will be until the spring of 1977, but that does not mean that its work force is not extremely worried about what will happen after that.
If the United Kingdom is to benefit from this industry the programming of platform building is essential. The work force must be able to see the prospect of continued employment and the management must be able to plan ahead in the knowledge that follow-up orders are available. The stability of the whole industry depends on confidence at all levels. Exploration and production both depend to a large extent in confidence, and the Government's policies, unfortunately, do anything but give confidence to the industry.
I must deal with the attitude of the Scottish National Party. It is unbelievable that it should cling to its production figure of 50 million tons a year which in present circumstances is totally unrealistic. Much of the investment to facili-

tate extraction at a rate of 100 million or 120 million tons a year has already been made. What will the nationalists do? Will they say that they will not permit the higher figure and therefore offer investors their money back? Of course that is impossible.
Will they go round the platform yards in Scotland and tell the work force that they are cutting back to 50 million tons and that there will be no jobs after two or three years? Do they intend to do the same at the pipe coating yards and at all the other centres where jobs have been created in Scotland? Will they tell the petrochemical industry in Scotland that it is unlikely that its full capacity will be needed? Are they planning to create more redundancies and more unemployment? Do they intend to dawdle and dither while other forms of energy are researched? Are they not aware that the cost of extracting oil from the North Sea is unlikely to become any cheaper, and do they not realise that they would be likely to be sitting on an asset of diminishing value? Whichever way the nationalist policy is viewed, it can be seen as a howling disaster.

Mr. Gordon Wilson: Has the hon. Member read the article I wrote in The Scotsman on the subject of a pragmatic depletion policy? If he has he will know that in it I accepted current production on the basis of the hardware which has been put into the North Sea, but that I suggested instead that we move over to a programme of developing the marginal fields, utilising the high revenue fields and concentrating on those which are labour-intensive?

Mr. Gray: I am grateful to the hon. Member for Dundee, East (Mr. Wilson) for giving me such a good synopsis of his article. I shall bear in mind what he said.
The Government have done one or two beneficial things. They recently set up a committee on the involvement of Scottish industry in oil. That was done on 26th September, and I now ask the Minister for information about progress by that committee. There now appear to be about 50,000 indirect and direct jobs from oil development. The number of offshore jobs could rise to nearly 25,000, but that is perhaps an optimistic figure. Jobs must outlive the present oil


boom. The Government must take every possible step to ensure that that is achieved.
The market for oilfield machinery is expected to double in the next 10 years according to an article in the Washington Weekly Energy Report of 3rd November. That machinery includes drilling, production and tubular equipment. The increased markets are not restricted to those areas. The "Buy British" campaign outlined in the Financial Times of 21st November gave an interesting catalogue of North Sea requirements over the next decade. However, we must ensure that we do not overlook the potential of the Latin American and Indonesian countries as well as of China and the USSR. I do not suggest that we try to compete in those areas and tow platforms to places so far away. However, there is a wide-ranging market and I hope that the Government will do everything possible to ensure that we have a full share of it.
I shall not speak much longer because I agreed with the Minister to a time limit in this debate. In his opening remarks my right hon. Friend asked a number of questions to which the Secretary of State did not reply. I hope that the Minister of State will consider answering those questions when he winds up the debate. My right hon. Friend referred to a conclusion which was drawn in an article in the Financial Times. He asked the Secretary of State whether he challenged that conclusion. If he does not, will the Minister care to comment on it now?
The second question which my right hon. Friend asked was whether the Secretary of State disputes the statement that extra debt interest payments alone will be double the anticipated revenues from United Kingdom oil in 1980. The Secretary of State did not answer either of those questions but he did more or less confirm that the whole charade of sale and buy back which has been offered to some companies, is the Government's way of obtaining participation.
The debate has been useful. It has been most interesting for hon. Members who served on the Committee to have the views of other hon. Members who did not serve on it. I thank my right

hon. and hon. Friends for the valuable contributions which they have made.

9.33 p.m.

The Minister of State, Department of Energy (Mr. John Smith): I should like to thank all hon. Members who have congratulated me on my present appointment. I greatly appreciate the kind comments that they have made. In view of some of the remarks that have been made I should like to say what a privilege it is for me to succeed such a devoted public servant as Lord Balogh, who, over many years, has done a great deal to satisfy the public interests of this country. The most important aspect of his work was, in opposition, to expose the deficiencies in the Conservative oil policy, and, in Government, to take constructive action to correct the deficiencies which this Government inherited.
The curious feature of this debate has been the way in which the great assault upon Government policy, which was presumed to take place on a Supply Day, petered out so early in the day. I do not know what a fly on the wall would have thought of the Shadow Cabinet deliberations last week on what subject they would select for a Supply Day debate this week, but I expected that if the Opposition thought that the offshore oil policy merited a Supply Day debate we should hear a scorching criticism of our policy. Moreover, one would have expected it to be related to recent events, especially in view of the remarks which the right hon. Member for Wanstead and Woodford (Mr. Jenkin) made about the Burmah support operation. As the Secretary of State observed trenchantly during the debate, we heard little about that matter today.
All we heard were the faded and battered arguments that we heard throughout the debates on the Petroleum and Submarine Pipe-lines Bill. The right. hon. Gentleman has not changed his presentation. Again, out of his yellowing folder, came the headlines of the Daily Telegraph, trotted out in succession as if they amounted to some critique of Government policy.
I imagine that what was in the right hon. Gentleman's mind when he originally thought of a Supply debate on this topic as a Trafalgar or a Waterloo, turned out to have as much justification as the War


of Jenkin's Ear. The truth may be that someone told the right hon. Gentleman some of the facts of the Burmah situation between the decision to have this debate and his speech today.
The most depressing factor about Opposition Members' speeches was their tendency to interpret every difficulty in the North Sea as though it were a resounding condemnation of Government policy. They are so anxious to stress what they see as the difficulties that they do this country a great disservice. It is a great disservice to say that exploration and development work in the North Sea is coming to a halt, as many hon. Members said today.
So, in face of the rumours and the Daily Telegraph headlines, I should like to give the House some of the facts about North Sea oil development this year. In this year, we have broken all records, I think, in terms of the level of offshore activity at each stage of the exploration and development process. First, 27 or 28 exploration rigs are drilling, as compared to 24 or 25 last year, against a Government forecast of 30—not a forecast of 40, as the right hon. Member well knows. He should go back and look at the last issue of the Brown Book: he will find it there. I have told him several times before that he is wrong to use the figure of 40. Perhaps he will now check the record again and see how wrong he is.
This year, 23 oil discoveries and one gas condensate find have been made, and we expect many to be promising after appraisal is completed. That is almost double the number of oil discoveries in any one year since oil exploration started, six years ago. Six giant oil platforms have been completed, towed out, and successfully installed, two ahead of schedule.
I was glad that the hon. Member for Ross and Cromarty (Mr. Gray) paid tribute—albeit, perhaps, only to one yard—to the success of the British platform yard capability. Far too few people realise that two oil production platform yards in this country successfully completed two platforms well ahead of schedule, and that one of them did it without losing a single day through industrial disputes. These are some of the facts not only about the oil industry but about

the British industrial situation generally. We could hear much more about them than some of the talk that we get from the Opposition.

Mr. Skeet: The Minister says "we" have achieved all this with rigs in the North Sea. Does he mean the Government? So far as I know, the Government do not have one rig or platform. Should he not say that it is private enterprise doing this work, harassed by the Government?

Mr. Smith: The hon. Member may be unfamiliar with the concept of allying himself with the public interest, but when I say "we", I am talking in terms of the successes of the nation. I think that the development of our North Sea resources is a success for the nation—a success which has been persistently knocked by the Opposition.
We have also been told that development finance for the North Sea is drying up. If that is so, it is a curious fact that by the end of this year £1,300 million will have been committed in development expenditure for the United Kingdom sector. We did not hear a word from the Opposition about the fact that oil is now flowing from that sector.

Mr. Tim Renton: All the facts which the hon. Gentleman has been trotting out stem from orders placed two or three years ago before the present Government came to power. Is it not also the case that the construction yards in this country have not received one new order for a production platform in the last six months, although the Government have put £15 million into those yards?

Mr. Smith: The hon. Gentleman should appreciate that I was rebutting an argument put forward by hon. Members opposite today that development finance had dried up. I was pointing out that this was not true. I reminded the House that about £1,300 million had been committed during this year. For example, the financial controller of BP sees no difficulty in raising finance for the quarter, while the Chairman of Texaco, has stated:
We are planning to continue an active drilling programme in the United Kingdom/North Sea in 1976 with the objective of proving sufficient reserves in individual areas to support the installation for producing facilities.


That is a declaration of confidence that Block 15/16 is going to be commercial. The hon. Member for Mid-Sussex (Mr. Renton says that this work results from decisions taken several years ago, and that is correct. The exploration comes first. But this year we have so far math 24 new finds, and that will lead to a considerable expenditure on exploitation.

Mr. Patrick Jenkin: My hon. Friend the Member for Mid-Sussex (Mr. Renton) put a sound point which the hon. Gentleman has not answered. Will he tell us how many new financing deals have been fixed since the last General Election? If he looks at the record, we will see that there have been none at all.

Mr. Smith: The right hon. Gentleman knows that 14 fields have been declared commercial and that financing has been found for 11 and financing for a twelfth is well under way. That is the important point. North Sea oil development will have its ups and downs, its successes as well as its difficulties, and it is an obligation on all of us who comment on the energy scene to give a balanced picture. But I am afraid that the zeal of the Conservative Party to throw any sort of criticism at the Government leads it sometimes to betray the national interest and show lack of concern for the success of North Sea oil development.
It is somewhat strange that the Opposition should choose oil policy as a stick to beat the Government, in the light of the Report of the Public Accounts Committee in a previous Parliament. That Report severely criticised the Conservative Government's oil policy, or lack of it. The present Government inherited no taxation proposals, no depletion controls, no proposals for participation. The hon. Member for Sutton and Cheam (Mr. Macfarlane) spoke of energy policy throughout the 1980s and 1990s, but how that could be done without depletion controls it is hard to imagine. The Public Accounts Committee criticised a previous licensing ground.
The right hon. Member for Orkney and Shetland (Mr. Grimond) asked about the effect of more recent legislation upon the Zetland County Council Act. The Petroleum and Submarine Pipe-lines Act does not affect or impinge upon the powers and responsibilities conferred under the Zetland County Council Act.
The right hon. Gentleman also raised the question of broken pipelines, and I understand his concern when a piece of pipeline detached itself from the seabed and floated to the surface. Our inspectors have been in touch with the company, and a full investigation has been carried out. We are satisfied that it has been thorough. As a result of the report, we will consider whether we should make regulations giving us power to cover any situation which may seem defective. We shall have difficulties—for example, there has been another more recently in the Beryl field. We must accept that extraction of hydrocarbon resources from such difficult waters will cause difficulties from time to time. Our obligation as a Government—indeed, our obligation as a Parliament—is to make sure that we have the most effective and tight Regulations that we can devise covering safety, the prevention of pollution and the prevention of accidents, but we shall not, I think, always be able to defeat the elements in the North Sea.
My hon. Friend the Member for West Stirlingshire (Mr. Canavan) asked some questions about the Grangemouth refinery. I am afraid that I cannot give a detailed answer about what the future refining policy will be there, but I remind him that the whole of the Forties field oil could not be refined at Grangemouth, because the full facilities at Grangemouth will not be large enough to do that. However, I have noted his concern.
My hon. Friend the Members for Leeds, West (Mr. Dean) and Aberdeen North (Mr. Hughes) asked whether we were taking sufficient care in the privision of safety regulations. The House knows that there has been a good deal of concern about diving safety. I believe that we now have the most advanced diving safety regulations in the world, and I understand that the Norwegians intend to copy our regulations almost word for word. We have also started an under water diving training centre.
A great deal of the fight and criticism in the debate turned on the question of participation. It is clear that the Conservative Party does not yet understand the reasons for participation. This cannot be due to any lack of explanation from the Government side. My right hon. Friend and many other Government spokesmen have frequently spelled out


the reasons; indeed, my right hon. Friend did so again today. I shall state them once again, for the special benefit, perhaps of the hon. Member for Horsham and Crawley (Mr. Hordern) who seemed particularly confused.
There are several reasons why the Government, in common with many other Governments, wish to see State participation in the development of our oil resources. First, we shall thereby obtain title to the oil once it leaves the ground. The oil in the ground is already in State ownership, that having been provided for by a previous Conservative Government, but our title to it would disappear once it was extracted. We want to have a say in the disposal of participation oil, which will be of great strategic importance to this country.
Second, we do not want to be outsiders in the development of our own oil resources. If we did not have the British National Oil Corporation and we did not have participation, we should be outsiders. We want to have some knowledge, and we want to gain expertise and have a capacity to exercise some control over the development of our national resources. I should have thought that those were crystal-clear objectives, and sound reasons for having participation.

Mr. Hordern: The hon. Gentleman has done no more than expound purposes which would have been achieved without 51 per cent. participation in any case. Those could certainly have been secured. He has himself admitted, as did his right hon. Friend, that 51 per cent. participation will not bring in a penny of extra revenue. The House would like to know who is responsible for this participation and who is responsible for the negotiations. Is it the Secretary of State for Energy, or is it the Chancellor of the Duchy of Lancaster? Where is the Chancellor of the Duchy?

Mr. Smith: With respect, that is rather a hotchpotch of questions. First, I note that the hon. Gentleman does not appear to challenge the desirability of having the title and a say in the disposal of oil. Without the BNOC having an influence in the operating committees and the development of fields we should not have that inside interest and control which is essential in the national interest. That

is what has led so many other countries to follow the route of participation. To many of them it is not a matter of political debate as it is here, and many of them which accept that it is a desirable objective are by no means Left Wing in character.
I hope that I have succeeded to some extent in explaining some of the reasons to the Opposition, but I recognise that their difficulty is that they do not seem to have learned from their mistakes in the past. I suspect that, like the Bourbons, they have neither learned anything, nor forgotten anything. We still hear the same old arguments trotted out against participation.
We heard some argument today from the Scottish National Party, too, but I noticed that the hon. Member for Dundee, East (Mr. Wilson) at no point said anything about the SNP policy of slowing down the rate of development to 50 million tons a year. In view of the frequency with which this idea is trotted out throughout Scotland, I found it surprising that it was not mentioned once today. I now understand the reason. The explanation of current SNP policy that the hon. Gentleman gave to the hon. Member for Ross and Cromarty was so convoluted that it was no doubt difficult to explain that idea. However he words it, the increasing slowing down of the rate of production of North Sea oil would slaughter the platform production industry, the module fabricating industry, and all the associated engineering works all over Scotland.
The Scottish National Party tends to speak with one voice in a constituency and another here. The hon. Gentleman gave a perfect example when he criticised the Government's decision to develop Portavadie as a concrete production platform site. I remind the House of the background to the concrete platform story in this country. Because we did not have sites, some years ago we lost four important concrete platform orders to Norway. Those platforms are now being towed into position and are a charge on the balance of payments affecting the record of this Government. In order to correct the situation, we have taken steps to ensure that there is an adequate supply of platform production capacity in this country.

Mr. Gordon Wilson: Too much.

Mr. Smith: The hon. Member for Argyll (Mr. MacCormick) is always asking me to spend more money on that platform site. He has consistently advocated the development of the site. He is conveniently absent when SNP Members take another line in the House. It is the same old business of one word here and another in the constituency. Members of the SNP should reflect now and again that whilst it is easy to be all things to all men, it is not a worthy posture for a political party.

Mr. Gordon Wilson: It should be remembered that the Government's estimate of platform orders is well below the figure they originally had in mind. If they had followed the slow development policy that the SNP suggested they would never have got into all the trouble they are in now.

Mr. Smith: I notice that the hon. Gentleman did not once refer to Portavadie or my accusations about the two-faced attitude of the SNP. We have taken a decision to develop there, with public money, a new platform site, which I believe is essential. It is difficult to predict whether the demand will be for concrete or steel platforms. If the tendency is towards concrete platforms, we must have the capacity if we want to build up our indigenous industry.
The hon. Member for Ross and Cromarty referred to the offshore supplies side of the work of the Department of Energy. I am grateful that he did, because it is often ignored. There is still an enormous market for the provision of equipment for the British sector of the North Sea—a market that can be gained by British industry. We are taking important steps towards increasing our share of that market. The code of practice and memorandum of understanding agreed between the Government and the United Kingdom Offshore Operators Association have now been signed by 36 of the 42 member companies. That is a signal advance towards obtaining a full and fair opportunity for British industry. I hope that British industry will follow up the opportunities that it will create.
The hon. Gentleman also referred to export capacity. We were very anxious to develop an export strategy. The Off-

shore Supplies Office will be represented at all four international exhibitions to be held in the coming year. I believe that its support for British industry will result in our industry's achieving a greater share of the orders for the North Sea and abroad.
What we have seen today, in the criticism of the Government's participation policy, is yet another stage of the moving front of Conservative policy.
Hon Members will remember that little more than a year ago the taxation proposals of the Government were first issued. There was a great howl from all the oil companies who spoke about Draconian measures and all the rest of it. [Interruption.] It is right that proposals should be modified as they go through Parliament. That is the purpose of Parliament. Some companies still complain that the Government's new policies are excessive. But I believe that our taxation policies are just about right. [Interruption.] I do not know why Opposition members try to shout me down, since, in their tour of office, they were supposed to have undertaken a review of taxation, but it did not amount to very much.
We have had a mixture of confused mis-explanations from former Conservative Ministers. When we produced the Petroleum and Submarine Pipe-lines Bill, which sought to remedy certain Conservative deficiencies, again there were considerable criticisms from the Opposition. The previous Conservative Government so mismanaged the licensing arrangements that they issued licences for a period of 46 years without any further provision.
In view of criticisms made of previous Labour Governments, I should point out that the Public Accounts Committee drew a distinction between the first three rounds of licensing and the fourth round. The first three related principally to gas, and the fourth dealt with oil. That is an important distinction between the policies of the present Labour Government and the previous Conservative Government.
The Conservatives are now full of talk about participation. That is now the moving front of the Conservative Party. But when the Government have successfully concluded the participation exercise, that argument will die down. In years


to come people will look back on the development of North Sea oil policy and all this will appear obvious. They will wonder what all the fuss and controversy were about.
Our objective, as a Government, has been to seek to do all we can in the national interest to develop gas and oil resources in the North Sea and to secure the situation for the future. That is the basis of a great future of this country. As we move towards the 1980s, we shall be an energy-strong country. We shall be the most important country, in energy terms, in Western Europe, and one of the most well-based in the world.

Mr. Skeet: At what cost?

Mr. Smith: That is a concept for the faint hearts of the Conservative Party to ponder.

Mr. Patrick Jenkin: rose—

Mr. Smith: I wish to make one reference to the way in which we see the present situation. My hon. Friend the Member for Cannock (Mr. Roberts) rightly drew attention to the fuel energy situation

and to the fact that in addition to our oil resources we have substantial coal resources that will last us for centuries—indeed, long after our oil resources have been exhausted.

We are conscious of the need for a genuinely integrated energy policy. Given the strength of our indigenous resources, believe that this country can achieve an integrated energy policy that will maximise the efficient use of all our fuel production.

Therefore, instead of the Opposition tonight attacking the Government, they should be praising us for securing so much in the national interest. When the history of this matter is written we shall have achieved not only an effective policy for the development of oil and gas resources but a policy for our coal industry and also for our nuclear power industry. This is a policy of which we should be proud, and I am sorry that, once again, the Conservatives have chosen for their weapon the boomerang.

Question put. That this House do now adjourn:—

The House divided: Ayes 275, Noes 293.

Division No. 10.]
AYES
[10.0 p.m.


Adley, Robert
Clark, Alan (Plymouth, Sutton)
Fry, Peter


Aitken, Jonathan
Clark, William (Croydon S)
Galbraith, Hon. T. G. D.


Alison, Michael
Clarke, Kenneth (Rushcliffe)
Gardiner, George (Reigate)


Amery, Rt Hon Julian
Clegg, Walter
Gardner, Edward (S Fylde)


Arnold, Tom
Cockcroft, John
Gilmour, Rt Hon Ian (Chesham)


Atkins, Rt Hon H. (Spelthorne)
Cooke, Robert (Bristol W)
Gilmour, Sir John (East Fife)


Awdry, Daniel
Cope, John
Glyn, Dr Alan


Bain, Mrs Margaret
Cormack, Patrick
Goodhew, Victor


Baker, Kenneth
Costain, A. P.
Goodlad, Alastair


Banks, Robert
Crawford, Douglas
Gorst, John


Bell, Ronald
Critchley, Julian
Gow, Ian (Eastbourne)


Bennett, Sir Frederic (Torbay)
Crouch, David
Gower, Sir Raymond (Barry)


Bennett, Dr Reginald (Fareham)
Crowder, F. P.
Grant, Anthony (Harrow, C)


Benyon, W.
Davies Rt Hon J. (Knutsford)
Gray, Hamish


Biffen, John
Dean, Paul (N Somerset)
Grieve, Percy


Biggs-Davison, John
Dodsworth, Geoffrey
Griffiths, Eldon


Blaker, Peter
Douglas-Hamilton, Lord James
Grimond, Rt Hon J.


Body, Richard
Drayson, Burnaby
Grist, Ian


Boscawen, Hon Robert
du Cann, Rt Hon Edward
Grylls, Michael


Bottomley, Peter
Durant, Tony
Hall, Sir John


Bowden, A. (Brighton, Kemptown)
Dykes, Hugh
Hall-Davis, A. G. F.


Boyson, Dr Rhodes (Brent)
Eden, Rt Hon Sir John
Hamilton, Michael (Salisbury)


Braine, Sir Bernard
Edwards, Nicholas (Pembroke)
Hampson, Dr Keith


Brittan, Leon
Elliott, Sir William
Hannam, John


Brocklebank-Fowler, C.
Emery, Peter
Harrison, Col Sir Harwood (Eye)


Brotherton, Michael
Evans, Gwynfor (Carmarthen)
Harvie Anderson, Rt Hon Miss


Brown, Sir Edward (Bath)
Eyre, Reginald
Hastings, Stephen


Bryan, Sir Paul
Fairbairn, Nicholas
Havers, Sir Michael


Buchanan-Smith, Alick
Fairgrieve, Russell
Hawkins, Paul


Buck, Antony
Farr, John
Hayhoe, Barney


Budgen, Nick
Fell, Anthony
Heath, Rt Hon Edward


Bulmer, Esmond
Finsberg, Geoffrey
Henderson, Douglas


Burden, F. A.
Fisher, Sir Nigel
Heseltine, Michael


Butler, Adam (Bosworth)
Fletcher, Alex (Edinburgh N)
Hicks, Robert


Carlisle Mark
Fletcher-Cooke, Charles
Higgins, Terence L.


Carr, Rt Hon Robert
Fookes, Miss Janet
Holland, Philip


Chalker, Mrs Lynda
Fowler, Norman (Sutton C'f'd)
Hooson, Emlyn


Channon, Paul
Fox, Marcus
Hordern, Peter


Churchill, W. S.
Fraser, Rt Hon H. (Stafford &amp; St)
Howe, Rt Hon Sir Geoffrey




Howell, David (Guildford)
Mitchell, David (Basingstoke)
Smith, Dudley (Warwick)


Hunt, John
Moate, Roger
Speed, Keith


Hurd, Douglas
Monro, Hector
Spence, John


Hutchison, Michael Clark
Montgomery, Fergus
Spicer, Jim (W Dorset)


Irvine, Bryant Godman (Rye)
Moore, John (Croydon C)
Spicer, Michael (S Worcester)


Irving, Charles (Cheltenham)
More, Jasper (Ludlow)
Sproat, Iain


James, David
Morgan, Geraint
Stainton, Keith


Jenkin, Rt Hon P. (Wanst'd &amp; W'df'd)
Morris, Michael (Northampton S)
Stanbrook, Ivor


Jessel, Toby
Morrison, Charles (Devizes)
Stanley, John


Johnson Smith, G. (E Grinstead)
Morrison, Hon Peter (Chester)
Steel, David (Roxburgh)


Johnston, Russell (Inverness)
Mudd, David
Steen, Anthony (Wavertree)


Jones, Arthur (Daventry)
Neave, Airey
Stewart, Donald (Western Isles)


Jopling, Michael
Nelson, Anthony
Stewart, Ian (Hitchin)


Joseph, Rt Hon Sir Keith
Neubert, Michael
Stokes, John


Kaberry, Sir Donald
Newton, Tony
Stradling Thomas J.


Kershaw, Anthony
Nott, John
Tapsell, Peter


Kimball, Marcus
Oppenheim, Mrs Sally
Taylor, R. (Croydon NW)


King, Evelyn (South Dorset)
Page, John (Harrow West)
Taylor, Teddy (Cathcart)


King, Tom (Bridgwater)
Page, Rt Hon R. Graham (Crosby)
Tebbit, Norman


Kitson, Sir Timothy
Pattie, Geoffrey
Temple-Morris, Peter


Knight, Mrs Jill
Penhaligon, David
Thatcher, Rt Hon Margaret


Knox, David
Percival, Ian
Thomas, Dafydd (Merioneth)


Lamont, Norman
Peyton, Rt Hon John
Thomas, Rt Hon P. (Hendon S)


Lane, David
Pink, R. Bonner
Thompson, George


Langford-Holt, Sir John
Price, David (Eastleigh)
Thorpe, Rt Hon Jeremy (N Devon)


Latham, Michael (Melton)
Prior, Rt Hon James
Townsend, Cyril D.


Lawrence, Ivan
Pym, Rt Hon Francis
Trotter, Neville


Lawson, Nigel
Rathbone, Tim
Tugendhat, Christopher


Lestor, Jim (Beeston)
Rawlinson, Rt Hon Sir Peter
van Straubenzee, W. R.


Lewis, Kenneth (Rutland)
Rees, Peter (Dover &amp; Deal)
Vaughan, Dr Gerard


Lloyd, Ian
Rees-Davies, W. R.
Viggers, Peter


Loveridge, John
Renton, Rt Hon Sir D. (Hunts)
Wakeham, John


Luce, Richard
Ranton, Tim (Mid-Sussex)
Walder, David (Clitheroe)


McAdden, Sir Stephen
Ridley, Hon Nicholas
Walker, Rt Hon P. (Worcester)


MacCormick, Iain
Ridsdale, Julian
Walker-Smith, Rt Hon Sir Derek


McCrindle, Robert
Rifkind, Malcolm
Wall, Patrick


Macfarlane, Neil
Rippon, Rt Hon Geoffrey
Walters, Dennis


MacGregor, John
Roberts, Wyn (Conway)
Warren, Kenneth


Macmillan, Rt Hon M. (Farnham)
Rodgers, Sir John (Sevenoaks)
Watt, Hamish


McNair-Wilson, M. (Newbury)
Rossi, Hugh (Hornsey)
Weatherill, Bernard


McNair-Wilson, P. (New Forest)
Rost, Peter (SE Derbyshire)
Wells, John


Madel, David
Royle, Sir Anthony
Welsh, Andrew


Marshall, Michael (Arundel)
Sainsbury, Tim
Whitelaw, Rt Hon William


Marten, Neil
St. John-Stevas, Norman
Wiggin, Jerry


Mates, Michael
Scott, Nicholas
Wigley, Dafydd


Mather, Carol
Shaw, Giles (Pudsey)
Wilson, Gordon (Dundee E)


Maude, Angus
Shaw, Michael (Scarborough)
Winterton, Nicholas


Maudling, Rt Hon Reginald
Shelton, William (Streatham)
Wood, Rt Hon Richard


Mawby, Ray
Shepherd, Colin
Young, Sir G. (Ealing, Acton)


Maxwell-Hyslop, Robin
Shersby, Michael
Younger, Hon George


Mayhew, Patrick
Sims, Roger



Meyer, Sir Anthony
Sinclair, Sir George
TELLERS FOR THE AYES


Miller, Hal (Bromsgrove)
Skeet, T. H. H.
Mr. Cecil Parkinson and


Miscampbell, Norman
Smith, Cyril (Rochdale)
Mr. Spencer Le Marchant.




NOES


Abse, Leo
Buchan, Norman
Davies, Bryan (Enfield N)


Allaun, Frank
Buchanan, Richard
Davies, Denzil (Llanelli)


Anderson, Donald
Butler, Mrs Joyce (Wood Green)
Davies, Ifor (Gower)


Archer, Peter
Callaghan, Rt Hon J. (Cardiff SE)
Davis, Clinton (Hackney C)


Armstrong, Ernest
Callaghan, Jim (Middleton &amp; P)
Deakins, Eric


Ashley, Jack
Campbell, Ian
Dean, Joseph (Leeds West)


Ashton, Joe
Canavan, Dennis
Delargy, Hugh


Atkins, Ronald (Preston N)
Cant, R. B.
Dell, Rt Hon Edmund


Atkinson, Norman
Carmichael, Neil
Dempsey, James


Bagier, Gordon A. T.
Carter, Ray
Doig, Peter


Barnett, Guy (Greenwich)
Carter-Jones, Lewis
Dormand, J. D.


Barnett, Rt Hon Joel (Heywood)
Cartwright, John
Douglas-Mann, Bruce


Bates, Alf
Castle, Rt Hon Barbara
Duffy, A. E. P.


Bean, R. E.
Cocks, Michael (Bristol S)
Dunn, James A.


Benn, Rt Hon Anthony Wedgwood
Coleman, Donald
Dunnett, Jack


Bennett, Andrew (Stockport N)
Colquhoun, Mrs Maureen
Eadie, Alex


Bidwell, Sydney
Concannon, J. D.
Edge, Geoff


Bishop, E. S.
Conlan, Bernard
Edwards, Robert (Wolv SE)


Blenkinsop, Arthur
Cook, Robin F. (Edin C)
Ellis, John (Brigg &amp; Scun)


Boardman, H.
Corbett, Robin
English, Michael


Booth, Albert
Cox, Thomas (Tooting)
Ennals, David


Boothroyd, Miss Betty
Craigen, J. M. (Maryhill)
Evans, Fred (Caerphilly)


Bottomley, Rt Hon Arthur
Crawshaw, Richard
Evans, Ioan (Aberdare)


Boyden, James (Bish Auck)
Cronin, John
Evans, John (Newton)


Bradley, Tom
Crosland, Rt Hon Anthony
Ewing, Harry (Stirling)


Bray, Dr Jeremy
Cryer, Bob
Faulds, Andrew


Brown, Hugh D. (Provan)
Cunningham, G. (Islington S)
Fernyhough, Rt Hon E.


Brown, Robert C. (Newcastle W)
Cunningham, Dr J. (Whiteh)
Fitch, Alan (Wigan)


Brown, Ronald (Hackney S)
Davidson, Arthur
Fitt, Gerard (Belfast W)







Flannery, Martin
Luard, Evan
Rowlands, Ted


Fletcher, Raymond (Ilkeston)
Lyon, Alexander (York)
Sandelson, Neville


Fletcher, Ted (Darlington)
Lyons, Edward (Bradford W)
Sedgemore, Brian


Foot, Rt Hon Michael
Mabon, Dr J. Dickson
Selby, Harry


Ford, Ben
McCartney, Hugh
Shaw, Arnold (Ilford South)


Forrester, John
McElhone, Frank
Sheldon, Robert (Ashton-u-Lyne)


Fraser, John (Lambeth, N'w'd)
MacFarquhar, Roderick
Shore, Rt Hon Peter


Freeson, Reginald
McGuire, Michael (Ince)
Short, Rt Hon E. (Newcastle C)


Garrett, John (Norwich S)
Mackenzie, Gregor
Short, Mrs Renée (Wolv NE)


Garrett, W. E. (Wallsend)
Mackintosh, John P.
Silkin, Rt Hon John (Deptford)


George, Bruce
Maclennan, Robert
Silkin, Rt Hon S. C. (Dulwich)


Gilbert, Dr John
McMillan, Tom (Glasgow C)
Sillars, James


Ginsburg, David
McNamara, Kevin
Silverman, Julius


Golding, John
Madden, Max
Skinner, Dennis


Gould, Bryan
Magee, Bryan
Small, William


Gourlay, Harry
Mahon, Simon
Smith, John (N Lanarkshire)


Graham, Ted
Mallalieu, J. P. W.
Snape, Peter


Grant, George (Morpeth)
Marks, Kenneth
Spearing, Nigel


Grant, John (Islington C)
Marquand, David
Spriggs, Leslie


Grocott, Bruce
Marshall, Dr Edmund (Goole)
Stallard, A. W.


Hamilton, James (Bothwell)
Marshall, Jim (Leicester S)
Stewart, Rt Hon M. (Fulham)


Hardy, Peter
Maynard, Miss Joan
Stoddart, David


Harper, Joseph
Meacher, Michael
Stonehouse, Rt Hon John


Harrison, Walter (Wakefield)
Mellish, Rt Hon Robert
Stott, Roger


Hart, Rt Hon Judith
Mendelson, John
Strang, Gavin


Hattersley, Rt Hon Roy
Mikardo, Ian
Strauss, Rt Hon G. R.


Hatton, Frank
Millan, Bruce
Summerskill, Hon Dr Shirley


Hayman, Mrs Helene
Miller, Mrs Millie (Ilford N)
Swain, Thomas


Healey, Rt Hon Denis
Mitchell, R. C. (Soton, Itchen)
Taylor, Mrs Ann (Bolton W)


Heffer, Eric S.
Moonman, Eric
Thomas, Jeffrey (Abertillery)


Hooley, Frank
Morris, Alfred (Wythenshawe)
Thomas, Mike (Newcastle E)


Horam, John
Morris, Charles R. (Openshaw)
Thomas, Ron (Bristol NW)


Hoyle, Doug (Nelson)
Morris, Rt Hon J. (Aberavon)
Thorne, Stan (Preston South)


Huckfield, Les
Moyle, Roland
Tierney, Sydney


Hughes, Rt Hon C. (Anglesey)
Mulley, Rt Hon Frederick
Tinn, James


Hughes, Robert (Aberdeen. N)
Murray, Rt Hon Ronald King
Tomlinson, John


Hughes, Roy (Newport)
Newens, Stanley
Tomney, Frank


Hunter, Adam
Noble, Mike
Torney, Tom


Irvine, Rt Hon Sir A. (Edge Hill)
Oakes, Gordon
Tuck, Raphael


Irving, Rt Hon S. (Dartford)
Ogden, Eric
Urwin, T. W.


Jackson, Colin (Brighouse)
O'Halloran, Michael
Varley, Rt Hon Eric G.


Janner, Greville
O'Malley, Rt Hon Brian
Wainwright, Edwin (Dearne V)


Jay, Rt Hon Douglas
Orbach, Maurice
Walden, Brian (B'ham, L'dyw'd)


Jeger, Mrs Lena
Orme, Rt Hon Stanley
Walker, Harold (Doncaster)


Jenkins, Hugh (Putney)
Ovenden, John
Walker, Terry (Kingswood)


Jenkins, Rt Hon Roy (Stechford)
Owen, Dr David
Ward, Michael


John, Brynmor
Padley, Walter
Watkins, David


Johnson, James (Hull West)
Palmer, Arthur
Watkinson, John


Johnson, Walter (Derby S)
Park, George
Weetch, Ken


Jones, Alec (Rhondda)
Parker, John
Wellbeloved, James


Jones, Barry (East Flint)
Parry, Robert
White, Frank R. (Bury)


Jones, Dan (Burnley)
Peart, Rt Hon Fred
White, James (Pollok)


Judd, Frank
Pendry, Tom
Whitlock, William


Kaufman, Gerald
Perry, Ernest
Willey, Rt Hon Frederick


Kelley, Richard
Phipps, Dr Colin
Williams, Alan (Swansea W)


Kerr, Russell
Prentice, Rt Hon Reg
Williams, Alan Lee (Hornch'ch)


Kilroy-Sllk, Robert
Price, C. (Lewisham W)
Williams, Rt Hon Shirley (Hertford)


Kinnock, Neil
Price, William (Rugby)
Williams, W. T. (Warrington)


Lambie, David
Radice, Giles
Wilson, Alexander (Hamilton)


Lamborn, Harry
Richardson, Miss Jo
Wilson, Rt Hon H. (Huyton)


Lamond, James
Roberts, Albert (Normanton)
Wilson, William (Coventry SE)


Latham, Arthur (Paddington)
Roberts, Gwilym (Cannock)
Wise, Mrs Audrey


Leadbitter, Ted
Robertson, John (Paisley)
Woodall, Alec


Lee, John
Roderick, Caerwyn
Woof, Robert


Lestor, Miss Joan (Eton &amp; Slough)
Rodgers, George (Chorley)
Wrigglesworth, Ian


Lewis, Arthur (Newham N)
Rodgers, William (Stockton)
Young, David (Bolton E)


Lewis, Ron (Carlisle)
Rooker, J. W.



Lipton, Marcus
Roper, John
TELLERS FOR THE NOES:


Litterick, Tom
Rose, Paul B.
Mr. Laurie Pavitt and


Loyden, Eddie
Ross, Rt Hon W. (Kilmarnock)
Miss Margaret Jackson.

Question accordingly negatived.

Orders of the Day — EUROPEAN COMMUNITIES (DEFINITION OF TREATIES)

10.12 p.m.

The Minister of State for Foreign and Commonwealth Affairs (Mr. Roy Hattersley): I beg to move,
That the European Communities (Definition of Treaties) (No. 3) Order 1975, a draft of which was laid before this House on 12th November 1975, in the last Session of Parliament, be approved.

Mr. Deputy Speaker (Mr. George Thomas): It will be for the convenience of the House to take at the same time the following Order:
That the European Communities (Definition of Treaties) (No. 4) Order 1975, a draft of which was laid before this House on 2nd December, be approved.

Mr. Hattersley: If the House approves these Orders, the seven treaties specified in them will become formally defined as Community treaties under Section 1 of the European Communities Act. That Act gives effect to all the rights, powers, liabilities, obligations and restrictions embodied within a Community treaty. But only Community treaties formally defined as such, under Section 1(3) of that Act, have effect in the United Kingdom. Without the approval of both Houses of Parliament to the treaties listed in the schedules to the Orders, they would create rights and obligations at the international level but could not, for instance, be invoked before the courts of this country.
With your permission, Mr. Deputy Speaker, and that of the House, I will describe briefly the contents of the Orders and the treaties which are embodied therein. If the House has detailed and complicated questions to ask about them and my right hon. Friend the Chief Secretary to the Treasury is able to catch your eye, he will be happy to answer them.
The No. 3 Order contains in its Schedule what amounts to amendments to the pre-accession treaties which, under Section 1(2) of the European Communities Act, automatically carry all domestic and international obligations. These are the three basic treaties of the Community—the EEC Treaty, the ECSC Treaty and the Euratom Treaty—and a fourth treaty which merges them together.
I shall return to the No. 3 Order in detail because that is the Order which may well be of particular interest to the House. But I wish first to describe the five treaties specified in the No. 4 Order which the House has agreed should be discussed at the same time.
In Part I of the Schedule to Order No. 4, a single treaty is specified. It gives tariff preferences for European Coal and Steel Community products originating in Israel. If the provisions of that treaty come into force, there will be certain advantages to member nations—all nine of them as opposed to the original six members of the Community.
In Part II of the Schedule to Order No. 4, four treaties are specified. The first is the Protocol of the EEC-Greece Agreement. It concerns provisions for mutual assistance between customs authorities for the prevention of fraud and it extends these provisions to the three new members of the EEC.
The second treaty specified in Part II of the Schedule concerns a Protocol relating to the EEC and Greece and provides for a full customs union between the EEC and Greece which will come to fruition between the period 1962 to 1984 and provides for financial assistance and the free movement of labour during the period when that customs union is being created.
The third treaty specified in Part II is an agreement between the European Coal and Steel Community and Israel agreeing to the provision of free trade in certain products.
The fourth treaty is a treaty specified in the form of an exchange of letters which renews agreements between the EEC and its member States and the Lebanese Republic, giving the Republic of Lebanon the status of most favoured nation. Those are the treaties which are specified in the No. 4 Order.
I now return to the definition of the No. 3 Order—

Mr. Eldon Griffiths: Will the hon. Gentleman accept that from the point of view of the Opposition it is not very satisfactory to have to debate together such an extraordinary mixture dealing with the accession of Greece, imports from Israel and technical co-operation with the Lebanon? I simply make the point. My hon. Friend


the Member for Harrow, East (Mr. Dykes) will deal with it later in more detail. I hope that the hon. Gentleman will take account of the fact that we find it most inconvenient to deal with such a mélange.

Mr. Hattersley: If the hon. Gentleman has read the Order, as I am sure he has, in his usual assiduous way, he will know that in each of the treaties it specifies a number of common features. The common features are the extension of provisions, which previously applied to the original members of the Community, to the new members of the Community, and on almost every occasion it is an extension of reduced tariffs and free trade arrangements. Therefore, there is a great deal of similarity between the Orders.
I hope the hon. Gentleman will not be confused by superficially reading what appears on the note or the Order, or superficially listening to what I say. If he examines the Orders and the treaties, even he will eventually conclude that there is some similarity in all of them. In spite of the fact that two apply to Greece and one to Israel, they are all concerned with reductions in tariffs and free trade arrangements.
I freely admit that the second Order is different from the other with which it is linked. The European Communities (Definition of Treaties) (No. 3) Order is the major item—

Mr. Nigel Spearing: Before the right hon. Gentleman leaves the Definition of Treaties (No. 4) Order, will he confirm something he said about the European Communities (No. 142) Order—the one with Greece? Did he say that there would be a free movement of labour between all member States of the EEC, with Greece not necessarily becoming a member of the Community, just by virtue of the treaty the House is being invited to approve tonight?

Mr. Hattersley: No. The association treaty, which I am sure my hon. Friend has read, is now in the Vote Office in the form of a Command Paper and gives Greece the opportunity to move towards free movement of labour at the time when association becomes complete. However, that is not operative immediately. If my hon. Friend reads the treaty, he will know the stages and the slow pro-

gress with which that might conceivably be achieved.
I turn to the European Communities (Definition of Treaties) (No. 3) Order which is the main issue before the House this evening. The two items in the schedule to that Order are the budgetary powers of the European Assembly and the establishment of an audit court. The proposals in the treaty are the outcome of long negotiations within the Council of Ministers and between that Council and the European Assembly. They are proposals which were agreed within the Council of Ministers on 4th June 1974. They were signed by representatives of member States during July 1975. However, we ask for the ratification of both Houses of Parliament so that they may enter into force now.
I deal, first, with the budgetary powers of the Assembly. The Treaty of 22nd April 1970 defines the present powers of the Assembly in relation to budgetary matters. It stipulates that from 1st January 1975 the full own resources system applied to the Six original Members of the Community. At the same time it specifies the Assembly's power over the budget.
Today we seek approval for a slight further extension of those powers which, if this House agrees and if agreement is obtained in another place, can be defined under five headings. The first is when the Assembly seeks a modification to the budget which does not involve an increase in the total of obligatory expenditure. By that I mean that the Assembly proposes specific increases and reductions to compensate for them. That change in the budget is accepted by the Council of Ministers unless the Council of Ministers provides a qualified majority against the new proposals.
Secondly, modifications to the budget involving increases in the total obligatory expenditure are accepted only if there is a qualified majority in favour of the new gross total. That is a reaffirmation of the previous proposal. Thirdly, the Assembly, acting with a majority of two-thirds of votes cast, is able to reject the whole draft budget and to ask the Council of Ministers for a new draft. Fourthly, when the draft budget is not adopted by the last day of the year—the system which is normally applied—its monthly expenditure is limited automatically to


one-twelfth of the previous year's budget and the Assembly will have the last word if the Council decides to spend more than one-twelfth in any one month on the "non-obligatory" chapters. Fifthly, the Assembly gives a discharge to the Commission in respect of the implementation of the budget.
These are limited extensions of the Assembly's powers, but they certainly are extensions and are intended to give representatives of the European Parliament the right to play a role in determining the nature, the extent and the area of Community spending.
The second material provision of this Order concerns the Court of Auditors and involves Articles 11, 15 to 18, and 27 and 28 of the major treaties. It creates a Court of Auditors which is intended to have a higher status and wider powers than the present Audit Board which examines spending within the Community. The Court will possess powers to examine all revenue and expenditure accounts and will be given the task of ensuring not only that spending within the Community is consistent with Community law but that it is consistent with sound financial management.
The Court of Auditors will publish an annual report both to the Council of the Community and to the Assembly, and by that means will, we believe, extend proper financial supervision and surveillance and a proper responsibility for financial matters within the Community. In our view the Court of Auditors is directly related to the proposals made by my right hon. Friend the Prime Minister for creating something like the Public Accounts Committee within the Community, and we hope that it will be the beginning of an extension within the Community of the sort of budgetary powers which exist in this House.
Because we believe that the objects of the Order concerning the budgetary powers of the Assembly will improve the efficiency and the working of the EEC we commend it to the House. Because the previous Order has an item to extend free trade relationships and free trade provisions of the Community with what are called third countries we commend that, too, and we hope the House will approve both Orders.

10.27 p.m.

Mr. Hugh Dykes: The House is still at that stage of grappling with European Community items of one kind or another, but I suppose that one could say in one sense that the grappling tonight will be less than we have experienced recently—for example, on security matters. There is here already a little corpus of experience because we are dealing with Orders Nos. 3 and 4 of the series—the second having been dealt with in November at the tail end of the last Session.
We had a debate on the Floor of the House, and a number of hon. Members, quite justifiably, raised the question of the mixture of items. The Minister of State said tonight, again, with some justification, that there is a common element running through the items before us, but I do not believe he can take that too far. As my hon. Friend the Member for Bury St. Edmunds (Mr. Griffiths) said, perhaps the mixture is not as bad as on that amazing occasion upstairs in the Standing Committee on Statutory Instruments in March this year. That was the first Order of the series, and it contained a combination of Coal and Steel protocol adjustments and the setting up of the European graduate university institute. Perhaps the mixture tonight is not as painful as that, but the Minister of State should have some thoughts about how we shall deal with these matters in the future.
Perhaps in Order No. 3 the mixture is not too violent because of the sheer separation. There is the European Investment Bank and there are amendments to the provisions of the protocol, one which the Minister of State explained in some detail. However, he did not have time to go into Order No. 5 which contains five separate items and an enormous and complicated list of matters. It starts with the European Coal and Steel Community agreement with Israel. I am curious to know the amount of steel or steel products involved. Another item deals with association with Greece, another with Israel and, finally, one with Lebanon.
The Minister of State said that there was a common theme running through these Orders. I am sceptical about that. Bearing in mind that there are deficiencies in the scrutiny procedure which we


should try to overcome, we must honestly consider how we can deal with such immensely complicated matters in the maximum of an hour and a half's debate. My personal view is that it might have been wise to separate Orders Nos. 3 and 4 so that at least some semblance of a fuller debate could have been attempted.

Mr. Hattersley: With respect, the hon. Gentleman had only to say "No" when the proposal was put to the House.

Mr. Dykes: I and hon. Members from both sides of the House are grappling with these matters. I do not want to labour the point too much tonight. I hope that in future we shall be able to have more satisfactory procedures because this is a question not just of the House scrutinising Community Instruments, be they primary or secondary legislation, but of the House approving treaties under Clause 1 (2) and (3) of the European Communities Act.
I suppose that the Minister of State and others could, with some justification, say that we are just giving effect to treaties, or renewing treaties if they were treaties before the Treaty of Accession, or making new treaties or proposals if they occurred after the signing of the Treaty of Accession. Be that as it may, I hope that by emphasising the matter the point has been registered with the Government.
I shall raise one or two matters on these complicated documents and ask the Minister to deal with one or two questions. The Opposition welcome and endorse entirely what the Minister has said about the establishment of the Court of Audit. Hon. Members from both sides of the House may wish to say something about the strengthening of the budgetary provisions. There is only a slight reinforcement and I believe that we should collectively work towards a substantial reinforcement of the budgetary powers of the European Parliament prior to direct elections, whenever they come.
I should have thought that there was universal enthusiasm for the provisions relating to the Court of Audit and also for the healthily stringent and welcome conditions which are to be established

for setting up this court. At the end of February the Prime Minister made an important speech which did not get the type of publicity which usually attaches to his speeches. He spoke at some length about the establishment of a European Parliament PAC. The Conservative Party looks forward to that. I ask the Minister what timetable he has in mind for this. The European Parliament has not yet got down to establishing this committee, which presumably must need the ratification of this agreement. In that context, how long does the Minister expect the ratification to take with the other member States? This matter has dragged on for quite a substantial time, but that is no criticism of the technicians involved in drawing up the complicated set of clauses.
I shall comment briefly on Order No. 4 before raising one or two questions which affect the European Investment Bank. I should like to ask the Minister whether he will say a little more about the association agreement with Greece and the putative future horizon of Greek membership. Can the Government say any more about their attitude to Greek membership? There has been a great deal of controversy about this matter, and I know that it goes beyond the narrow confines of this Order.
None the less, it is materially important to this and other member States. There is controversy, even amongst those who want to see Greece join, about how long it will take for Greece to get in, bearing in mind that Greece has basically a weak economy. It may be that political objections to Greek membership are non-existent. I happen to believe that that is so. The economic arguments against early membership are tangible, but that does not mean that we do not welcome with open arms the idea and principle of Greek membership.
The final Order, relating to the agreement with the Lebanon, is the one exception to this list of measures. It is a renewal provision, necessary because the agreement ran out in July and needs to be renewed until July 1976. What looks likely to happen then, and to any future arrangements? Coming back to the present day, is not the present situation in the Lebanon worrying? Is this likely to affect United Kingdom trade with the Lebanon? With regret, I assume that it


is. One hopes that it has not made too much of a dent in our trade.
On the European Investment Bank, which is the subject of the third Order, there is a combination among hon. Members of enthusiasm, misgivings about its future and some questions about its present operations. So far as these stray briefly beyond the marvellously esoteric subject of the construction of the unit of account for the bank, I hope that the Minister may have some answers to give.
We should, for example, like an explanation of how the unit of account is to be constructed under this new treaty revision. Presumably it is entirely satisfactory and no matter for controversy, except that in the debate in the European Parliament earlier this year, a number of party groups tried to get an amendment accepted which would have allowed the Commission a decisive role in being consulted by the Bank after the Governors—that is, the Finance Ministers of the member States—felt it desirable to make an immediate change in the unit of account finances. That amendment was rejected, and rightly sopartly because one should do nothing to reduce the EIB's operational freedom—despite the protests of Commissioner Borschette himself, who wanted the Commission to have that decisive rôle.
The EIB has been an unqualified success. A rather more specialist body than some other Community institutions, it has morale and resources, as well as a board and a committee of management which are energetic and dynamic, and it appears to fulfil its role satisfactorily.
Could the Minister say something about the handling of applications for loans? I base this question on a regrettably brief conversation that I had with the British Vice-President, Sir Raymond Bell, some months ago, when he gave the impression that United Kingdom applications were slow in coming forward. It may therefore be necessary to give publicity in this country to the bank and what it can offer. Is more publicity needed?
For example, one sees in the annual report that the loans to United Kingdom companies totalled 149·5 million units of account, which was more than double the total in 1973, our first year of membership, and therefore perfectly satisfactory. But the figure for France was

193·7 million units of account. Admittedly, France has been a member State since inception, and that makes a difference, assuming that there is a build-up of loan applications. But France now has a bigger and richer economy than the United Kingdom. That is regrettable but true. Therefore, the case for assistance from the EIB to legitimate projects in this country must, presumably, he commensurately greater.
The Minister has done a service to the House in giving an explanation, but I do not think that it goes far enough. Although there was no protest at the beginning of the debate when the motion was moved, there should be longer debates, and I hope that they will be possible in future.

10.40 p.m.

Mr. Nigel Spearing: The protests to which the hon. Member for Harrow, East (Mr. Dykes) referred arise directly from the procedure, about which we have no choice. Under Section 1(3) of the European Communities Act, we have these Orders in Council, which are notionally the sort of Orders that we have for our domestic legislation, but on the back of the Orders, and only on the back, we find in the small print references to the Command Papers that are really the substance of what we are discussing. Some of them can be laid at a relatively late date, and important pieces of legislation can pass through, under the guise of a domestic Statutory Instrument, with relative ease. Grave dissatisfaction about that procedure was expressed during the passage of the measure and we are seeing some of the results of the procedure tonight.
I share the doubts about a common theme. If there is a common theme, it is a procedural one, and an unsatisfactory one at that. The House has a difficult choice. We could send the Orders upstairs to a Committee that could discuss them for an indeterminate period, perhaps two and a half hours or three hours—my right hon. Friend the Lord President has not yet said how long. But the Committee can pass no motion other than that it has considered the Orders. If it comes across something it thinks important, it has no procedural means of drawing it to the attention of the House when the Order is brought back to the House. That procedure, which we are


not using tonight, but which is open to us if 20 Members rise, is unsatisfactory.
The present procedure is even more difficult. I am sorry that the two Orders are being taken together. I did not hear the proposal, because of the noise at the end of the Division. It would be better to take the Orders one at a time, in view of the range of subjects involved. However, we are now saddled with this procedure. Unless the House decides that it does not wish to approve the Orders tonight, or my right hon. Friend withdraws one, the Orders will go straight through.
The (No. 4) Order refers to a number of documents, but the main ones concern the customs agreement with Greece, European Communities Document No. 151; the matter with Israel, European Communities Document No. 137; and the matter contained in European Communities Document No. 142—an additional protocol to the agreement establishing association between the EEC and Greece.
I intervened in my right hon. Friend's speech because I had read Document No. 142 and the annex dealing with sparking plugs, brushes and brooms, and tights and stockings imported into Ireland from Greece, and I did not recall anything about the free movement of labour. My right hon. Friend gave a reply that did not entirely satisfy me. I understand that if we pass Document No. 142 tonight it means that at the end of the transitional period a free movement of labour can begin between this country and Greece. My first assumption was that it would start after the acceptance of the Order. My right hon. Friend corrected me, and said that it would start after the transitional period. If that is so—I hope that the Chief Secretary will make the situation clear when he replies—it means that we are being asked to approve a document that says that at the end of the transitional period provided for in the protocol there will be free movement of labour between this country and Greece thereafter, or certainly that such a system will be introduced, or that we shall have an obligation to introduce it.
If that is so—and I understand that it is the case—I would have thought that the Government would think twice about introducing this measure in this way. If

what I have said is correct, I hope that the Minister will have second thoughts about the European Communities (Definition of Treaties) (No. 4) Order. I think that even he will agree that the opportunity open to us tonight is not adequate to discuss something of major significance both to this country and to Greece. We all know the problems broubht about by free movement of Labour, particularly from countries that have not been so fortunate as we have been, in terms of income and industry.
Some hon. Members may ask why the matter has not been referred to by the Scrutiny Committee. These documents have not been before that Commitee because they are treaties ratified by the Order in Council. Again, this outlines the unsatisfactory and bad way in which the House is being asked to consider matters that can be of great significance.
I turn to the European Communities (Definition of Treaties) (No. 3) Order which relates to the change in budgetary procedures and the European Investment Bank. I hope that the Minister would say in what way the document changed the present procedure in relation to that contained in European Communities Document No. 138. However, the Minister did not do so. Therefore, I hope that the Chief Secretary will confirm that it means that the Assembly will, if it has a complete majority, be able to modify any part of the budget. At present the Assembly has relatively limited powers over certain administrative parts of the budget but, following the modification, it will be able to range over the entire field, subject to the Council, acting by qualified majority, modifying any of the amendments adopted by the Assembly.
This raises an important matter in terms of a qualified majority. If the Assembly has these powers, the Council will not be able, unless it has a qualified majority, to reverse the decision. I hesitate to suggest that this will be similar to a House of Commons versus House of Lords situation, but it opens up the possibility. At the moment, if any one of the members of the Community does not agree the qualified majority is not reached, but if in future there is any accession to the Community by other States it will mean that that qualified majority will be reached.

Mr. John Roper: As I understand the situation, the position in regard to qualified majority was amended by the Treaty of Rome at the time of the last accession, and no doubt there will be further amendment.

Mr. Spearing: My hon. Friend is right. The original treaty was amended on the accession of the United Kingdom, Denmark and Eire. I thought that even within the qualified majority a matter could be blocked if one of the major members of the Community did not agree, but if, in future, there is an enlargement of the Community, the qualified majority could be more easily obtained.

Mr. Roper: My hon. Friend seems to have missed the point. The point I made was that if on the previous occasion an amendment was made, a similar amendment would presumably be made at the time of any further accession.

Mr. Spearing: I am very grateful to my hon. Friend because he used the words "would presumably be made." I think that is a very important point, and I am grateful to him for having mentioned it, because although these may appear to be matter of detail, I am sure that in the future they could be of very great significance for the country and, indeed, for the working of the Community as a whole. It would be bad if the House of Commons were approving a significant change in the Treaty of Rome without the Official Report recording the position as it was before the change.
Finally, I turn to the European Investment Bank and the definition of the way in which the unit of account can be changed. I should like my hon. Friend to explain, for the benefit of people who are not very well up in the detailed finances of the Community—I include myself in that number—the link between the unit of account as defined for the purposes of the European Investment Bank and the unit of account as defined for ordinary procedures of the Community. I presume that the definition for one is different from the definition for the other, and that one could be changed at a different time from the other. But if that is so, does it not produce complications in matters of investment? If not, perhaps my hon. Friend will explain why not.
I fully concede that I am not as knowledgeable as I ought to be in these matters, but many people reading this debate will see that these are very detailed matters which can have considerable significance in the future economic and social life of this country. Therefore, I do not apologise for raising these points this evening.

10.52 p.m.

Mr. J. Enoch Powell: I associate myself with the hon. Members for Harrow, East (Mr. Dykes) and for Newham, South (Mr. Spearing) in their criticisms of the procedure whereby we are considering essentially disparate treaties under these two Orders.
I am not at all objecting to the decision that was suggested by the Chair and adopted by the House, that we should take these two Orders together, because that has hardly increased our embarrassment. After all, it has only increased from four or five to six or seven the number of items that we are combining together by the method which I think the Romans called per saturam. It was, incidentally, not permitted to do that in the Roman Senate, at any rate in its better days.
The right hon. Gentleman the Minister of State suggested that the disparity was really not so great, because there was a technical similarity between the various treaties. They were treaties assimilating the position of the new members to that which had existed with the earlier Six. Nevertheless, even in the brief debate already it is quite clear that there are considerations that apply to one of those treaties which do not apply to the others.
If the argument be—I am not sure that it was, and I hope it was not—that since these arrangements already existed at the time of our entry, for the original Six, it really is not practical politics for us to discuss them more than formally, I believe that that would be in breach of the essential purpose of Section 1(3) of the European Communities Act 1972.
Those of us who lived through the lengthy debates on Clause 1 of the Bill will remember the great interest which the House took in this form of legislation—at one stage it was called "legislation by prerogative"—whereby the law of this country could be altered by a treaty, provided that that treaty was written


into the Act of 1972 by such an Order as is at present before us. Had the House been told in 1972 that it would be the practice not to put forward the new treaties for the consideration of the House one by one, but to lump four or six together, several supporters of British membership would have been reluctant to agree to Clause 1(3) without some amendment to ensure that treaties should be dealt with separately.
I hope, therefore, that in future in drawing these Orders the Government will as far as possible proceed upon the basis of "one treaty, one Order". I know that that kind of proposition does not look very attractive to the Leader of the House and the Patronage Secretary, but a wise Leader—which of course we have—and a wise Patronage Secretary—which of course we have—are aware from experience that often a procedure which appears likely to cost the House more time proves in practice to be a saver of time. I believe that it would be so if the, Government in this respect conformed with the wishes which have been expressed by both sides of the House.
I come now to the one substantive point which I wish to make. It has been touched upon briefly from the Opposition Benches and at greater length by the hon. Member for Newham, South. By applying to the three new members of the Community the arrangement for association with Greece—the arrangement which was described in shorthand as a developing customs union—we are accepting as an intention all that follows from association. Indeed, it is not a mere customs union, and no more, into which we enter by association. The process is integral to the nature of the Community itself, and is intended to lead not merely to the free movement of labour but, in due course, to full membership. I do not think that that is denied. To deny it would deprive the proposal of much of its reality.
We are, therefore, entitled—indeed obliged—on this first tentative step, to consider what is meant by membership of the Community on the part of a country situated as Greece is. It is of the nature of this kind of process that at one moment the House is told "This is merely the first stage of a move towards a customs union", and at the next stage

it is told "The House, of course, has agreed to a customs union and therefore it is implicit that we move on to the free movement of labour". Having moved to the free movement of labour and association, we are informed "It is far too late to argue about these matters: the principle has been decided, and if there had been any objections they should have been raised earlier".
I am raising my objection much earlier; I am raising it now. Even if it were conceivable that the nine members of the Community should form an economic and monetary union—which is the same as a political union—with the common democratic institution of a directly elected Assembly, it is totally inconceivable that Greece should form part of such a union. This is so for a very simple and very crass reason, but one which is evidenced by recent and by earlier history—that is, its geographic remoteness.
In all economic and political union, in all democratic union, which is what we are talking about, contiguity is absolutely vital, and the attempt to link together, either in a federal union or—

Mr. Roper: indicated dissent.

Mr. Powell: The history of the last 20 or 30 years illustrates what I am saying. While one can, with some prospect, seek to amalgamate contiguous territories and contiguous populations—although the difficulties are severe enough there—the attempt to amalgamate into a political union territories and populations which are widely Separated geographically invariably founders.

Mr. Roper: One might cite counterexamples, such as the States of Hawaii and Alaska, which are part of the United States and seem in perfect accordance with the other 48 States. There are other parts of the world where areas noncontiguous with the main part of a political entity are able to work with that entity.

Mr. Powell: The hon. Gentleman is entitled to his Hawaii and Alaska—

Mr. Michael Stewart: And Northern Ireland?

Mr. Powell: Northern Ireland is 14 miles removed from the mainland of


Great Britain and has been linked with Great Britain historically from the most primitive times. If the right hon. Member for Fulham (Mr. Stewart) wishes to extend my term "contiguous" to include "adjacent", I accept his correction. But we are quibbling if we attempt to ignore the wide geographical separation of Greece, by a large part of Europe, from the members of the EEC.
I am aware that Turkey, also, is expected to be in the same bag. Absurdity reaches an even higher level there, for the notion that Greece and Turkey and the nine members of the EEC could be welded together into a democratically-governed unit, economic, monetary and political, is total nonsense. It is manifest nonsense. No one can seriously believe that such a possibility exists. What we are doing at the moment is taking the first tentative step towards that, without anyone seriously believing that we are ever going to get there but nevertheless invoking the implication that that is the intention somewhere along the road.
This being, perhaps, our first opportunity, I want to enter at any rate my protest against this monstrous proposition that we should begin to move towards a political amalgamation between this United Kingdom, Greece, Turkey and the rest of the present EEC. Even if this House is not prepared to admit that it is absurd, it is absurd in the real world.

11.5 p.m.

The Chief Secretary to the Treasury (Mr. Joel Barnett): We have had a brief but very interesting debate. I appreciate that many hon. Gentlemen find the procedure unsatisfactory for debating these Orders, but I am happy also, along with the right hon. Member for Down, South (Mr. Powell), to entrust the arrangement of these debates to the hands of—as he put it—our very able and competent Leader of the House and Patronage Secretary. No doubt we shall come back to the question of how we debate these Orders under the EEC, and many other Orders, on other occasions. Perhaps for now I may deal briefly with some of the points raised.
First, I note that the hon. Member for Harrow, East (Mr. Dykes), speaking for the Opposition, welcomed the audit court. I believe that all thinking people will

welcome the idea of strengthening the former audit board by full-time members in an audit court, given the additional powers that are recognised in this treaty.
The hon. Member asked me a number of questions concerning the PAC-type body. That is a matter for the Assembly, not for the United Kingdom Government or any other Government, and it will eventually affect its decision as to the timetable for ratification—of the hon. Member's questions.
As for this country, I hope that the House will follow the recommendation of my right hon. Friend in opening this brief debate, and accept these Orders. We shall then have taken the first step to deal with ratification here, and another House will then have to complete the procedure. We shall then have dealt with our share of the ratification. How long it will take other countries is not for me to say. I hope that it will not be too long.
When that has been done I hope, equally, that the Assembly will proceed as fast as possible to set up a PAC-type committee, which I think we would both agree would be helpful for the checking of expenditure in the Community.
The hon. Member for Harrow, East, the right hon. Member for Down, South and my hon. Friend the Member for Newham, South (Mr. Spearing) dealt with Greece, on which, as they will know, I am an expert. The hon. Member for Harrow, East asked me about possible future full membership of Greece in the Community. We are publicly committed to welcoming the future membership of Greece, but, of course, that may be some time ahead. Meanwhile, we have, from our vast experience of these matters, advised Greece to look carefully at the terms of the treaty before committing herself to entry.
I hope that the association convention which we are discussing tonight will be a step in a direction that will be helpful both to Greece and to the Community generally.

Mr. Dykes: Will the right hon. Gentleman confirm that the Orders here relating to Greece do not add anything materially to the terms of the existing association agreement?

Mr. Barnett: I was about to come to the other points raised by my hon. Friend


the Member for Newham, South and by the right hon. Gentleman, who—I hope he will not mind my saying this—went rather wide on the subject of economic and monetary union, and so on, and the geographical relationship of Greece to the EEC. I hope that he will forgive me if I do not follow that argument too closely this evening, because if I did so I might be trespassing on the good will of Mr. Deputy Speaker. I certainly would be happy, as the right hon. Gentleman knows, to debate economic and monetary union with him at another time.
I should like to deal now with a point raised by my hon. Friend the Member for Newham, South about the problem—mentioned also by other hon. Members—of the free movement of labour.
Perhaps I may refer directly to the additional protocol to the agreement establishing the association between the EEC and Greece consequent on the accession of new member States to the Community, signed at Brussels on 28th April 1975. Under the additional protocol, new member States accede to the EEC—Greece association agreement which provides for a full customs union between the Community and Greece over a period of 22 years from 1962. In other words, it would be in the interesting year of 1984 that the situation could arise about which my hon. Friend the Member for Newham, South spoke. I hope that he will feel that we shall have one or two more opportunities to debate that matter before we reach that interesting year.

Mr. Spearing: Are we to take it from that that approving Command Paper No. 6289 tonight will not oblige us to accept the free movement of labour in 1984, which, in economic terms, is not very far away?

Mr. Barnett: I am happy to assure my hon. Friend that it will not oblige us.
The hon. Member for Harrow, East spoke about the European Investment Bank and asked a number of questions. He asked about the handling of applications for loans, and whether our applications for loans had been rather slow. In fact, loans approved since 3rd January 1973 to the present time total more than £230 million. I hope that hon. Members will accept that that is a satisfactory re-

turn on our initial investment, which we believe is bound to increase as private and public bodies realise the value of this source of medium-term money. I hope that there will be a greater recognition of the value to this country of being able to obtain such loans.
My hon. Friend the Member for Newham, South asked about the unit of account and its relation to the budget unit of account. It is a wholly different matter, of course. The European Investment Bank unit of account is largely a procedural matter, and it is used for the purposes of the preparation of the balance sheet of the European Investment Bank. It will not affect any loans that we receive which are designated in the particular currency in which we receive them. There is little relationship between this and the budget unit of account.
The final question was again asked by my hon. Friend the Member for Newham, South. It referred to the Assembly powers. I recall what my right hon. Friend the Minister of State said in opening. He referred to the powers specifically. But the not very substantial additional powers under the terms of this treaty relate primarily to what we call obligatory expenditure under the treaty—that is to say, the present Article 203 of the treaty establishing the EEC. That provides that the Council must give its approval by a qualified majority in order that these proposed modifications to obligatory expenditure may be accepted. In the treaty submitted for ratification, this rule will remain applicable to modifications proposed by the European Parliament the effect of which would be to increase the total sum of expenditure of an institution. They will also no longer be applicable to modifications proposed by the European Parliament, the effect of which would not be to increase overall expenditure, owing to the fact that the increase in expenditure would be expressly compensated by one or more proposed modifications correspondingly reducing expenditure. In the latter case, if the Council wishes to reject such a proposed modification, it must act by a qualified majority, under Article 203(5)(b).
I am glad to have been able to satisfy my hon. Friend the Member for Newham, South and anyone else who is interested in this very important matter. I hope


that the two Orders will be acceptable to the House.

Question put and agreed to.

Resolved,
That the European Communities (Definition of Treaties) (No. 3) Order 1975, a draft of which was laid before this House on 12th November 1975, in the last Session of Parliament, be approved.

Resolved,
That the European Communities (Definition of Treaties) (No. 4) Order 1975, a draft of which was laid before this House on 2nd December, be approved.—[Mr. Hattersley.]

Orders of the Day — CONSOLIDATION, &c., BILLS

Ordered,
That Mrs. Elaine Kellett-Bowman be discharged from the Joint Committee on Consolidation, &amp;c., Bills and that Mr. Douglas Hurd be added to the Committee.—[Mr. Walter Harrison.]

Orders of the Day — CROFTING REFORM (SCOTLAND) BILL

Order for Second Reading read.

Ordered,
That the Bill be referred to the Scottish Grand Committee.—[Mr. Walter Harrison.]

Orders of the Day — PUBLIC ACCOUNTS

Ordered,
That, notwithstanding the Order of the House of 18th December in the last Session of Parliament relating to nomination of Members of the Public Accounts Committee, Mr. Guy Barnett be discharged from the Committee and Mr. John Watkinson be added to the Committee for the remainder of this Parliament.

Ordered,
That this Order be a Standing Order of the House.— [Mr. Walter Harrison.]

Orders of the Day — EUROPEAN SECONDARY LEGISLATION, &c.

Ordered,
That, notwithstanding the Order of the House of 18th November in the last Session of Parliament relating to nomination of Members of the Select Committee on European Secondary Legislation, &amp;&amp;c., Mr. Tam Dalyell

be discharged from the Committee and Mr. James Craigen be added to the Committee for the remainder of this Parliament:

Ordered,
That this Order be a Standing Order of the House.—[Mr. Walter Harrison.]

Orders of the Day — EXPENDITURE

Ordered,
That, notwithstanding the Order of the House of 18th November in the last Session of Parliament relating to nomination of Members of the Expenditure Committee, Mr. W. W. Hamilton and Mr. Phillip Whitehead be discharged from the Committee and Mr. Robin F. Cook and Mr. Ted Graham be added to the Committee for the remainder of this Parliament.

Ordered,
That this Order be a Standing Order of the House.—[Mr. Walter Harrison.]

Orders of the Day — NATIONALISED INDUSTRIES

Ordered,
That, notwithstanding the Order of the House of 15th November in the last Session of Parliament relating to nomination of Members of the Select Committee on Nationalised Industries, Mr. John Prescott be discharged from the Committee and Mr. R. E. Bean be added to the Committee for the remainder of this Parliament.

Ordered,
That this Order be a Standing Order of the House.—[Mr. Walter Harrison.]

Orders of the Day — PETITIONS

Pensions and Christmas Bonus

Mr. Eddie Loyden: I beg to ask leave of the House to present a petition with 36,000 signatures that reads as follows:
That the undersigned, electors from Merseyside, are concerned with the continual rise in food prices and the high costs of fuel for heating, and the difficult situation that confronts pensioners existing on the present State pension.
Wherefore your Petitioners pray that your House will give favourable consideration to a Bill, first for immediate assistance with the introduction of the £10·00 Christmas Bonus (as the small increase due on the 20th November, while welcome, is insufficient by far), and also to ensure that the Basic State Pension should not be less than 50 per cent. of the adult male average earnings for a married couple and not less than 33 per cent. for a single person.

To lie upon the Table.

High Court Attendances (Officers of the House)

Mr. Nigel Spearing: I beg to present a petition from Alan John Bale. As I propose to move a motion in respect of the petition, I ask for it to be read.

The Clerk of the House: read the petition, which was as follows:

To the Honourable the Commons of the United Kingdom of Great Britain and Northern Ireland in Parliament assembled.

The Humble Petition of Alan John Bale, a solicitor of the Supreme Court of Judicature, of Lincoln House, 296–302 High Holborn, London W.C.1, on behalf of the Reverend Reginald Watkins Cleaves, John Bernard Wilcox, the Reverend Edward Stanley Guest and John Bernard Hale, who are First, Second, Third and Fourth Defendants respectively in proceedings pending in the High Court of Justice, Chancery Division 1975 -;C-No. 2690 instituted by the Congregational Memorial Hall Trust Limited as Plaintiffs, and due to be heard in London shortly, Sheweth

That the Plaintiffs seek determination of legal issues affecting their Constitution and Denominational scope following the passage of the United Reformed Church Act 1972.

And that reference is desired to be made at the said proceedings to the Minutes of Evidence taken on the 23rd and 24th Days of May 1972 before the Committee to whom the United Reformed Church Bill was referred, and to the Official Report of the House for the 22nd day of June 1972 (H.C. Deb 839; Cols 629–672).

Wherefore your Petitioner prays that your Honourable House will be graciously pleased to give leave to the proper officers of the House to attend the hearing of the said proceedings and to produce the said Minutes and Reports and formally to prove the same before the Court according to their competence; and that leave be given for reference to be made to the said Minutes and Reports of Debates.

And your Petitioner, as in duty bound, will ever pray, etc.

Alan John Bale

Lincoln House

296–302 High Holborn

London W.C.1.

27th November 1975.

Ordered,
That leave be given to the proper Officers of this House to attend the trial of the said action and to produce the said Minutes of Evidence and Reports of Debates, and that leave be given for reference to be made to the said Minutes and Reports.—[Mr. Spearing.]

ADJOURNMENT

Motion made, and Question proposed, That this House do now adjourn.— [Mr. Pavitt.]

Orders of the Day — NUCLEAR FUEL REPROCESSING

11.22 p.m.

Dr. John Cunningham: I am grateful for the opportunity to introduce a debate on nuclear fuel reprocessing and possible overseas contracts. I do so for a number of reasons.
The first is my general interest in energy policy and the nuclear industry in particular. The second is that I am a member of the Select Committee on Science and Technology, which is currently looking at the energy situation in the United Kingdom. Thirdly, British Nuclear Fuels, at Windscale, West Cumbria, is within my constituency. It employs there approximately 3,000 people and has an obvious influence on the whole community there. The fourth reason is that I am a sponsored member of the General and Municipal Workers' Union, the major union representing the people who work in this industry, and, as such, I declare an interest. My fifth reason is that the Secretary of State for Energy has called for a great public debate on the nuclear industry, and, in particular, on the issue of reprocessing and overseas work.
I do not think that anyone involved in the consideration of energy policy seriously disputes the present or future role that the nuclear industry will play in the United Kingdom. Certainly, the long-term nature of energy resources and the need to have a far-reaching energy strategy dictate that nuclear fuels and the nuclear industry should have an important role. No one disputes the role of coal, oil or gas, but several people have suggested that the so-called benign sources of energy generation could in some way replace nuclear energy. I doubt that myself, and I know that many other commentators feel the same. Recently the energy technology support unit in the Department of Energy published a document in which it said that no more than 6 per cent. to 8 per cent. of the United Kingdom's requirements at the end of the century could be provided in this way.
It is safe to say that nuclear energy generation will be with us for a long time. The Government would certainly say so, as they are committed to a programme based on nuclear fission, including the further development of the fast reactor. This is confirmed by Cmnd 5695 of July 1974.
The British nuclear industry has a long established and excellent record. The United Kingdom Atomic Energy Authority is recognised world-wide as a competent, progressive organisation. It acts in an advisory capacity for foreign Governments. It trades world wide with the United States of America, in Europe, and in the Far East. It works in reactor design and in the whole spectrum of nuclear activity. British Nuclear Fuels Limited, which was indeed separated from the United Kingdom Atomic Energy Authority by the previous Labour Administration, works in uranium enrichment, in fuel manufacture and in fuel reprocessing. The industry as a whole spans more than 20 years and can look back with great credit on its record in that time.
Together with the development of the industry, we have seen the development of the checks and balances that have been necessary so that there can be not only public accountability but reassurance in what is acknowledged on all sides to be a very difficult industry and one which produces major problems in terms of the health and safety of its employees, problems of the environment and for the communities living in the vicinity of particular installations.

Mr. John Evans: I am sure that my hon. Friend is aware that I have the headquarters of British Nuclear Fuels Limited in my constituency. Does my hon. Friend accept that the men and women who work on these projects are as concerned as anyone else about the protection of the earth and the environment? Indeed, I believe that these individuals would refuse to design such plants as the reprocessing plant if they, as scientists, engineers, designers and craftsmen, thought that there was any serious risk to the environment or mankind.
Will my hon. Friend confirm that this proposed development, which is an extension of plant which has been operating at Windscale for many years, will have to be built to reprocess spent fuel from Britain's own AGR and SGHWR nuclear reactors? Will he agree that this huge capital investment will bring considerable benefits to the whole of the North-West Region of England, and particularly to the construction industry, which badly needs it?
Will my hon. Friend also confirm that most of the world's leading nuclear scientists are strongly in favour of containing the reprocessing of spent nuclear fuel to as few centres as possible, to prevent any possible proliferation of nuclear weapons, and that Windscale would be regarded by most of them as an ideal international centre?

Dr. Cunningham: I congratulate my hon. Friend on that formidable intervention. I was about to say that the industry has developed and along with it have developed the many checks and safeguards that have been necessary. The Nuclear Installations Inspectorate has licensed sites and installations. Then there is the National Radiological Protection Board and the Medical Research Council's radiobiology unit at Harwell. The Royal Commission on Environment Pollution is now sitting and is specifically looking into the problems of radiation hazards in the environment.
The United Kingdom Atomic Energy Authority and British Nuclear Fuels Limited have their own safety administrations. All in all, there has been a tremendous oversight and control of the development of the industry, and rightly so.
In addition, international bodies are involved in nuclear safety. No one should underestimate the role played by the trade unions in these matters. I give credit to my union—the General and Municipal Workers' Union. No one should underestimate the vigilance of the unions in safeguarding the interests of the work forces they represent and the wider interests of the community.
In West Cumbria there is a local liaison committee specifically to deal with the wider aspects of the effect of the Wind-scale works on the community.
I want to talk now about the record of British Nuclear Fuels Limited in nuclear reprocessing, because it is important to establish exactly what the record is. Reprocessing is a well-established technology, based on chemical separation. The object is to recover chemically valuable uranium and plutonium which remain behind in nuclear fuel elements after they have been used in power stations. Uranium can then be used again to produce fuel for nuclear


reactors, and plutonium will have a useful contribution to make in the future. It is also currently used as a prototype fuel in operations which may be rewarding in the future.
The used fuel elements are treated to recover these two chemical elements. The radioactive fission products produced during the life of the elements in reactors are also separated. It is these products which have been referred to as "nuclear waste", but it is important to emphasise that they form a small part of the total tonnage of the material reprocessed at Windscale.
Every tonne of fuel reprocessed produces only about 30 litres of fission product solution. In the last 24 years no less than 18,000 tonnes of fuel have been reprocessed at Windscale, producing approximately 700 cubic metres of concentrated fission products, or waste. At present, this waste is stored quite safely as a liquid in stainless steel tanks and is constantly monitored. There are rigorous safety procedures under the surveillance of the Nuclear Installations Inspectorate of the Health and Safety Executive, and there have been no incidents involving this form of storage. There have been no fatal accidents in the industry associated with radioactive material.

Mr. Robin F. Cook: I should like to raise two points concerning the contract mooted in the Press. First, my hon. Friend has said that plutonium can be used as a fuel in reactors of the future. My hon. Friend will be aware that it can be used in nuclear explosives, and he will also be aware that the contract recently concluded with Japan provides for 40 tons to be returned to that country. Does he consider it prudent to negotiate for such a large amount of fissile explosive material to be returned to a country which is not a party to the non-proliferation treaty?
I accept what my hon. Friend says about safety of storage, but he will be aware that the contract provides for waste materials to come from Japan six years before the reprocessing plant is opened. Why do they have to come six years before we can commence the reprocessing?

Dr. Cunningham: I cannot promise to answer my hon. Friend's question. I must proceed with my argument.
About 17,000 tonnes of fuel elements taken from the United Kingdom's 11 Magnox power stations have been reprocessed at Windscale. In addition, since the mid–1950s, more than 60 shipments of fuel have been sent for reprocessing from overseas, principally from Italy—44; Japan—13; and Canada—three, on terms favourable to the United Kingdom balance of payments. This overseas business has involved the reprocessing of more than 700 tonnes of Magnox fuel at Windscale—about 5 per cent. of the total tonnage of material reprocessed there. There have been no incidents in transit.
By 1990 it is anticipated that BNFL will have reprocessed a further 22,500 tonnes of United Kingdom material. Over the same period of 15 years an additional 3,700 tonnes of spent fuel elements will have been reprocessed for overseas customers, under the terms of existing contracts. This figure might be increased by about 6,000 tonnes if the company were allowed to continue in the overseas business—a profitable field. Of this 6,000 tonnes, 4,000 would be attributed to the Japanese contract now being negotiated.
It is important to have these facts on record, because there has been considerable speculation, and the nature of the debate to date has been fraught with rumour and innuendo rather than dealing with the facts of the situation. This does not contribute to informed debate.
A number of years ago, shortly after I entered the House, I put down a number of Parliamentary Questions about overseas contracts in this field. They were met with a deafening silence in the national Press—the "Daily Dustbin" included. I was appalled to see that the Liberal Party has tabled an Early-Day Motion, No. 24, on the dumping of atomic waste, referring to
dangerous gas-cooled nuclear power stations".
It is an astonishingly inept and irresponsible motion from a party that purports to be a major political party. I regret, also, to see Early-Day Motions in the names of some of my hon. Friends concerning the question of the nuclear pollution of the environment, without any


reference to myself, to the industry, or to the unions working in it.
When the chief executive of BNFL recently spoke in this building it was noticeable how few hon. Members bothered to attend and listen to the industry's case being so effectively put. I am delighted to say that the national Press, on the whole, has been fair in its treatment of the new contract, but if the "Daily Dustbin" wants a lesson in objective reporting of the nuclear industry, it should observe a little-known provincial newspaper called the Whitehaven News whose conduct in this matter has been excellent. Indeed, it has contributed greatly to the public debate in my constituency, and I applaud it for that.
I turn to the special significance of this contract. Domestic progress, as we have seen, will go ahead, and so will existing overseas work. There is wholehearted support for the contract from the major trade unions in the industry and all those associated with it. I have a list in my possession, but I do not think time will allow me to announce them all. However, it is true to say that every union associated with this work is in favour of the contract proceeding.
As we have heard, there are few alternatives to the nuclear industry. There should be an informed public debate and this contract should be explained to the public in its true light, rather than portrayed in the way that it has in some of the unfortunate Press coverage.

Mr. Patrick Jenldn: I should like to make it entirely clear that the Opposition warmly support the view that the hon. Gentleman takes about the importance of the processes at Windscale. Would the hon. Gentleman like to express an opinion on whether he thinks that there should be more information about the manner in which the information reached the Daily Mirror about the Japanese contract?

Dr. Cunningham: I am not sufficiently informed to comment on that matter. Regrettably, I was abroad when the first Daily Mirror articles were published, so I shall pass on to other matters without further comment.
Certainly nuclear waste presents problems in the environment and hazards to operatives in industry. These matters are the subject of great scrutiny and re-

search, and great effort within the industry and in the agencies outside. It is probable that in future, disposal of nuclear waste as a glass will be effected as an industrial process.
I am much concerned with reprocessing, but I am also concerned with the effective use of some of the recovered materials. Nuclear reprocessing technology can play a much more effective part in the Non-Proliferation Treaty. I should certainly applaud that. Therefore, there are questions to be asked about the export of plutonium. However, that is not a major reason for not proceeding with the proposed contract. There has been some Government intervention on this. We are entitled to ask why. What are the Government trying to do, in possibly holding up this contract?
It has been suggested that we could take the matter to a Select Committee. Why? The facts are known. The Government should not interfere with BNFL any more. The Government established BNFL. They wanted BNFL to operate on a self-supporting financial basis. It cannot exist within the terms of the British industry alone; it needs to generate income from abroad, as it has been doing and as it will continue to do. I hope that my hon. Friend the Minister will confirm that the raison d'être for the BNFL will continue and its future will be assured.

10.40 p.m.

The Under-Secretary of State for Energy (Mr. Alex Eadie): I should like first to congratulate my hon. Friend the Member for Whitehaven (Dr. Cunningham) on having initiated this debate. He has done the whole House a valuable service.
I would like, first of all, to say that the Government welcome the interest that this debate shows in the important question of nuclear fuel reprocessing, and also the opportunity it gives the Government to explain what is being done and what is in prospect.
The primary purpose of British Nuclear Fuels' plant at Windscale, which employs some 3,500 persons, is to reprocess the irradiated fuel which arises from the United Kingdom's present and prospective nuclear power stations. Reprocessing is the operation of extracting uranium plutonium and fission products


from this irradiated fuel. We have two reasons for undertaking it. First, the physical properties of fuel elements, particularly those used in Magnox reactors, are such that they cannot satisfactorily be stored indefinitely after they have been taken from the reactor. Secondly, we need to recover the unused uranium and the plutonium because of the energy which is locked up in them. The fuelling of a long-term nuclear programme, which we expect to include fast reactors, will require a supply of plutonium, so we need to isolate and accumulate it now.
The Windscale plants also undertake some reprocessing work for foreign countries—Italy and Japan, where the work involves largely the fuel from Magnox reactors which we sold to them, Spain, Sweden, Switzerland, Germany, Canada, the Netherlands and Belgium. The plutonium arising from this work is returned to the countries concerned under international safeguards arrangements which are designed to ensure that it is used only for peaceful purposes. Wind-scale at present handles up to 1,500 tonnes of fuel annually, of which the foreign component is less than 8 per cent. The plant will need to be extended to deal with the increasing requirements of the home nuclear programme, whatever is done about the foreign business issue, to which I will refer later.
There is nothing mysterious about the reprocessing operation itself. Essentially, it is a chemical process. The problem is the intensely radioactive nature of the substances that have to be handled. Safety has to be preserved. So far as this is concerned, fuel in transit to the plant is subject to strict safety rules laid down by the Department of the Environment, and based on international standards. The site itself is licensed under the Nuclear Installations Act 1965, and the plant and the work done there are subject to strict safety rules and requirements imposed and enforced by the independent Nuclear Installations Inspectorate, which is part of the Health and Safety Executive.
A main problem, which is rightly the subject of great public interest, is that of dealing with the comparatively small quantity of radioactive waste which is isolated during reprocessing and in particular those constituents of it which remain highly radioactive for a long

period. These substances have at present to be stored in a liquid form. Like the other operations on the site, storage is subject to the strict safety requirements of the Nuclear Inspectorate. The liquid is, in practice, kept in special tanks made of thick stainless steel and encased in massive concrete chambers. Spare tanks are always available in case of emergency. Present holdings of waste include some which has arisen from foreign contracts already undertaken this would represent, by 1980, about 10 per cent. of total holdings.
I shall not attempt to minimise the problem of long-term storage of liquids of this kind, though the method has been used in the United Kingdom since the early 1950s without incident. British Nuclear Fuels, however, is developing a process, already tried and proved on a small scale, for converting this waste into a kind of glass which is very stable and virtually insoluble.

Dr. John A. Cunningham: Will my hon. Friend confirm that the fission product waste element of the waste products is reduced to about 0·1 per cent. of its activity within about 300 years, and that it is the transuranic actinides—a small proportion of the waste—which have much longer half-lives?

Mr. Eadie: I shall come to that matter, if my hon. Friend will let me explain. It is for his benefit, not mine, that I am trying to race through my reply.
For the longer term, research is going on into the possibility of ultimate solutions, in one of which the long-life elements in the waste could be isolated and in effect be burnt up in a reactor.
The question that is of great current interest is whether BNFL ought to undertaken more foreign business, and specifically whether a contract for the reprocessing of some 4,000 tonnes of Japanese fuel should be accepted. In this connection, I should emphasise two points which my right hon. Friend the Secretary of State for Energy has already made. First, these are still proposals, and new contracts will not be undertaken without the Government's agreement. Secondly, the proposal has been presented in the Press and elsewhere as a plan to allow other countries to dump waste here. This is quite wrong. The


work that is being considered is the reprocessing of irradiated fuel.
This reprocessing, as I mentioned earlier, produces a small quantity of high-activity waste amounting to only 3 per cent., of the quantity of fuel going into the process, and the problem is what to do about this. In fact, the terms under which it is proposed that this work could be undertaken would eliminate the risk that we should be obliged to retain this waste in the United Kingdom indefinitely. As I said, BNFL is developing a solidification process. Once solidified, the waste could be transported safely.
The proposed contract includes an option which would allow BNFL to return the waste in solidified form to the country of origin. This option we would seek to support by appropriate intergovernmental understandings. As a long stop, the contracts would also provide that the whole obligation to reprocess the fuel could be cancelled should BNFL find itself unable to develop a process which would enable it to return the waste under the main options. The combination of these options, together with the fact that the timing of the start of reprocessing work is such that we shall know how we stand on the solidification process before we begin to produce any waste, means that we need not be at risk of having to retain the high-activity waste here.
That is a sketch of the safety and environmental considerations. It is also material that the reprocessing work can be commercially valuable. Earnings from past and current foreign reprocessing contracts are expected to amount to about £45 million by 1980, and the Japanese work would be worth some £400 million. These figures exclude earnings from the associated transport operations.
Foreign work also helps to provide employment in an area that has employment problems. In this connection, the House may like to know that the unions representing people employed at Wind-scale, who would be closely involved with the work and who live in the area, have strongly expressed the view that more foreign work can properly and safely be undertaken, and should be undertaken.
For the Government, the question is where the balance should lie. We have not yet made our decision. In doing so we shall take full account of the views which have been expressed here tonight.
My hon. Friend the Member for Newton (Mr. Evans) mentioned that there was a commitment by the trade union movement. I visited Windscale and had long consultations with the trade unions, after which I described the people engaged there as probably having the most protected environment of any industrial workers in the country. As a life-long trade unionist, I have always dreamed not only of a National Health Service but of an industrial national health service. The workers at Windscale are protected by the most elaborate medical equipment, which many workers in other industrial occupations would like.
I am seized of my hon. Friend's point. I had a meeting with representatives of the trade unions, who told me without exception. "We need jobs in this area. This contract would bring us jobs." They assured me that they were satisfied with the internal safety of the undertaking.
I turn to the question of new processing work, and I shall try to deal with employment implications.
Expansion at Windscale is not wholly dependent on more foreign business, but this would help. On present assumptions, total increase in Windscale employment to 1986 is estimated at 1,500–500 of which is dependent upon overseas work. In addition, 500 production workers would be required for continuous employment over the next 10 years.
Dealing with the general health record of Windscale workers, I wish to point out that the incidence of diseases that can be linked with radiation is no greater than the Registrar General's figures would indicate as normal for the population as a whole. No case of a causal connection between contraction of leukaemia, or other cancer, and employment at Wind-scale has yet been proven.
On the subject of accidents at Wind-scale, I would point out that in the last 10 years the only serious incident was the accidental release of radioactive ruthenium into one building in September


1973, when 35 men received some contamination, mostly slight. A report—Command 5703—said that no short-term harm was expected to any of these men and that the long-term risk associated with the highest level of internal contamination was estimated to be about one extra chance in 100 of contracting lung cancer. In the same period there were four conventional industrial injuries regarded as serious. As for other injuries involving radioactivity, seven plutonium

workers at various times sustained minor contaminated wounds, giving rise to some uptake of plutonium.
I hope that I have dealt with many of the points raised. I reiterate that the Government are considering the matter and no doubt will report to the House in due course. Once again, I thank my hon. Friend for initiating the debate.

Question put and agreed to.

Adjourned accordingly at eight minutes to Twelve o'clock.